Facebook, Inc. today reported financial results for the quarter ended September 30, 2021. "We made good progress this quarter and our community continues to grow," said Mark Zuckerberg Facebook founder and CEO. "I'm excited about our roadmap, especially around creators, commerce, and helping to build the metaverse." Third Quarter 2021 Financial Highlights Third Quarter 2021 Operational and Other Financial ...

Facebook, Inc. (Nasdaq: FB) today reported financial results for the quarter ended September 30, 2021.

"We made good progress this quarter and our community continues to grow," said Mark Zuckerberg , Facebook founder and CEO. "I'm excited about our roadmap, especially around creators, commerce, and helping to build the metaverse."

Third Quarter 2021 Financial Highlights



Three Months Ended September 30,


Year-over-Year %
Change


In millions, except percentages and per share amounts

2021


2020 (1)



Revenue:







Advertising

$

28,276


$

21,221


33%


Other

734


249


195%


Total revenue

29,010


21,470


35%


Total costs and expenses

18,587


13,430


38%


Income from operations

$

10,423


$

8,040


30%


Operating margin

36%


37%




Provision for income taxes

$

1,371


$

287


378%


Effective tax rate

13%


4%




Net income

$

9,194


$

7,846


17%


Diluted earnings per share (EPS)

$

3.22


$

2.71


19%















(1) Our third quarter 2020 effective tax rate was 4%, which reflects a one-time income tax benefit of $913 million related to the effects of a tax election to capitalize and amortize certain research and development expenses for U.S. income tax purposes. Excluding this tax benefit, our effective tax rate would have been 11 percentage points higher and our diluted EPS would have been $0.31 lower.

Third Quarter 2021 Operational and Other Financial Highlights

  • Facebook daily active users (DAUs) – DAUs were 1.93 billion on average for September 2021 , an increase of 6% year-over-year.
  • Facebook monthly active users (MAUs) – MAUs were 2.91 billion as of September 30, 2021, an increase of 6% year-over-year.
  • Family daily active people (DAP) – DAP was 2.81 billion on average for September 2021 , an increase of 11% year-over-year.
  • Family monthly active people (MAP) – MAP was 3.58 billion as of September 30, 2021, an increase of 12% year-over-year.
  • Capital expenditures – Capital expenditures, including principal payments on finance leases, were $4 .54 billion for the third quarter of 2021.
  • Share repurchases – We repurchased $14.37 billion of our Class A common stock in the third quarter and had $7.97 billion remaining on our prior share repurchase authorization as of September 30, 2021 . We also announced today a $50 billion increase in our share repurchase authorization.
  • Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $58 .08 billion as of September 30, 2021.
  • Headcount – Headcount was 68,177 as of September 30, 2021, an increase of 20% year-over-year.

CFO Outlook Commentary

Starting with our results for the fourth quarter of 2021, we plan to break out Facebook Reality Labs, or FRL, as a separate reporting segment. As we have discussed, we are dedicating significant resources toward our augmented and virtual reality products and services, which are an important part of our work to develop the next generation of online social experiences. The new segment disclosures will provide additional information on the performance of FRL and the investments we are making.

Under this reporting structure, we will provide revenue and operating profit for two segments: The first segment, Family of Apps, will include Facebook, Instagram, Messenger, WhatsApp and other services. The second segment, Facebook Reality Labs, will include augmented and virtual reality related hardware, software and content. We expect our investment in Facebook Reality Labs to reduce our overall operating profit in 2021 by approximately $10 billion . We are committed to bringing this long-term vision to life and we expect to increase our investments for the next several years.

Ahead of the fourth quarter earnings call, we will share additional details about the reporting format of our segmented financials.

We expect fourth quarter 2021 total revenue to be in a range of $31.5 billion to $34 billion . Our outlook reflects the significant uncertainty we face in the fourth quarter in light of continued headwinds from Apple's iOS 14 changes, and macroeconomic and COVID-related factors. In addition, we expect non-ads revenue to be down year-over-year in the fourth quarter as we lap the strong launch of Quest 2 during last year's holiday shopping season.

As previously noted, we also continue to monitor developments regarding the viability of transatlantic data transfers and their potential impact on our European operations.

We expect 2021 total expenses to be in the range of $70 -71 billion, updated from our prior outlook of $70 -73 billion. We anticipate our full-year 2022 total expenses will be in the range of $91 -97 billion, driven by investments in technical and product talent and infrastructure-related costs.

We expect 2021 capital expenditures to be approximately $19 billion , updated from our prior estimate of $19 -21 billion. For 2022, we expect capital expenditures to be in the range of $29 -34 billion, driven by our investments in data centers, servers, network infrastructure, and office facilities.

We expect our fourth quarter 2021 tax rate to be in the high-teens. Absent any changes to U.S. tax law, we would expect our full-year tax rate in 2022 to be similar to the full-year 2021 rate.

Please note that our outlook for 2022 expenses, capital expenditures and tax rate are preliminary estimates as we have not finalized our 2022 budget.

New Financial Reporting Segment Structure

Beginning in the fourth quarter of 2021, we will implement a new financial reporting segment structure with the following two reportable segments:

  • Family of Apps (FoA) , which includes Facebook, Instagram, Messenger, WhatsApp and other services.
  • Facebook Reality Labs (FRL) , which includes augmented and virtual reality related consumer hardware, software and content.

Webcast and Conference Call Information

Facebook will host a conference call to discuss the results at 2 p.m. PT / 5 p.m. ET today. The live webcast of Facebook's earnings conference call can be accessed at investor.fb.com , along with the earnings press release, financial tables, and slide presentation. Facebook uses the investor.fb.com and about.fb.com/news/ websites as well as Mark Zuckerberg's Facebook Page ( https://www.facebook.com/zuck ) and Instagram account ( https://www.instagram.com/zuck ) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at +1 (402) 977-9140 or +1 (800) 633-8284, conference ID 21997795.

Transcripts of conference calls with publishing equity research analysts held today will also be posted to the investor.fb.com website.

About Facebook

Founded in 2004, Facebook's mission is to give people the power to build community and bring the world closer together. People use Facebook's apps and technologies to connect with friends and family, find communities and grow businesses.

Contacts

Investors:
Deborah Crawford
investor@fb.com / investor.fb.com

Press:
Ryan Moore
press@fb.com / about.fb.com/news/

Forward-Looking Statements

This press release contains forward-looking statements regarding our future business plans and expectations. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: the impact of the COVID-19 pandemic on our business and financial results; our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our dependency on data signals and mobile operating systems, networks, and standards that we do not control; risks associated with new products and changes to existing products as well as other new business initiatives; our emphasis on community growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing privacy, safety, security, and content review efforts; competition; risks associated with government actions that could restrict access to our products or impair our ability to sell advertising in certain countries; litigation and government inquiries; privacy and regulatory concerns; risks associated with acquisitions; security breaches; and our ability to manage growth and geographically-dispersed operations. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption "Risk Factors" in our Quarterly Report on Form 10-Q filed with the SEC on July 29, 2021 , which is available on our Investor Relations website at investor.fb.com and on the SEC website at www.sec.gov . Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2021. In addition, please note that the date of this press release is October 25, 2021, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we use the following non-GAAP financial measures: revenue excluding foreign exchange effect, advertising revenue excluding foreign exchange effect and free cash flow. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures.

We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

We exclude the following items from our non-GAAP financial measures:

Foreign exchange effect on revenue . We translated revenue for the three and nine months ended September 30, 2021 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar, which we believe is a useful metric that facilitates comparison to our historical performance.

Purchases of property and equipment; Principal payments on finance leases. We subtract both purchases of property and equipment and principal payments on finance leases in our calculation of free cash flow because we believe that these two items collectively represent the amount of property and equipment we need to procure to support our business, regardless of whether we procure such property or equipment with a finance lease. We believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business. Free cash flow is not intended to represent our residual cash flow available for discretionary expenditures.

For more information on our non-GAAP financial measures and a reconciliation of GAAP to non-GAAP measures, please see the "Reconciliation of GAAP to Non-GAAP Results" table in this press release.


FACEBOOK, INC.


CONDENSED CONSOLIDATED STATEMENTS OF INCOME


(In millions, except for per share amounts)


(Unaudited)





Three Months Ended September 30,


Nine Months Ended September 30,



2021


2020


2021


2020


Revenue

$

29,010



$

21,470



$

84,258



$

57,893



Costs and expenses:









Cost of revenue

5,771



4,194



16,301



11,482



Research and development

6,316



4,763



17,609



13,240



Marketing and sales

3,554



2,683



9,656



8,310



General and administrative

2,946



1,790



6,524



4,965



Total costs and expenses

18,587



13,430



50,090



37,997



Income from operations

10,423



8,040



34,168



19,896



Interest and other income, net

142



93



413



229



Income before provision for income taxes

10,565



8,133



34,581



20,125



Provision for income taxes

1,371



287



5,496



2,198



Net income

$

9,194



$

7,846



$

29,085



$

17,927



Earnings per share attributable to Class A and Class B common stockholders:









Basic

$

3.27



$

2.75



$

10.27



$

6.29



Diluted

$

3.22



$

2.71



$

10.11



$

6.22



Weighted-average shares used to compute earnings per share attributable to









Class A and Class B common stockholders:









Basic

2,814



2,850



2,832



2,850



Diluted

2,859



2,891



2,876



2,883



Share-based compensation expense included in costs and expenses:









Cost of revenue

$

147



$

116



$

428



$

327



Research and development

1,849



1,297



5,224



3,557



Marketing and sales

218



180



631



516



General and administrative

165



129



474



352



Total share-based compensation expense

$

2,379



$

1,722



$

6,757



$

4,752



FACEBOOK, INC.


CONDENSED CONSOLIDATED BALANCE SHEETS


(In millions)


(Unaudited)





September 30, 2021


December 31, 2020


Assets





Current assets:





Cash and cash equivalents

$

14,496



$

17,576



Marketable securities

43,579



44,378



Accounts receivable, net of allowances of $110 and $114 as of September 30, 2021







and December 31, 2020, respectively

12,088



11,335



Prepaid expenses and other current assets

5,258



2,381



Total current assets

75,421



75,670



Equity investments

6,758



6,234



Property and equipment, net

53,726



45,633



Operating lease right-of-use assets, net

11,063



9,348



Intangible assets, net

365



623



Goodwill

19,065



19,050



Other assets

3,187



2,758



Total assets

$

169,585



$

159,316








Liabilities and stockholders' equity





Current liabilities:





Accounts payable

$

2,195



$

1,331



Partners payable

909



1,093



Operating lease liabilities, current

1,086



1,023



Accrued expenses and other current liabilities

13,158



11,152



Deferred revenue and deposits

464



382



Total current liabilities

17,812



14,981



Operating lease liabilities, non-current

11,554



9,631



Other liabilities

6,859



6,414



Total liabilities

36,225



31,026



Commitments and contingencies





Stockholders' equity:





Common stock and additional paid-in capital

54,334



50,018



Accumulated other comprehensive income (loss)

(207)



927



Retained earnings

79,233



77,345



Total stockholders' equity

133,360



128,290



Total liabilities and stockholders' equity

$

169,585



$

159,316



FACEBOOK, INC.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


(Unaudited)





Three Months Ended
September 30,


Nine Months Ended
September 30,



2021


2020


2021


2020


Cash flows from operating activities









Net income

$

9,194



$

7,846



$

29,085



$

17,927



Adjustments to reconcile net income to net cash provided by operating activities:









Depreciation and amortization

1,995



1,698



5,953



4,999



Share-based compensation

2,379



1,722



6,757



4,752



Deferred income taxes

(786)



(1,506)



(139)



(816)



Other

(73)



7



(161)



56



Changes in assets and liabilities:









Accounts receivable

(555)



(377)



(1,072)



1,547



Prepaid expenses and other current assets

(253)



264



(2,566)



(89)



Other assets

11



6



(184)



(8)



Accounts payable

694



139



560



39



Partners payable

(30)



58



(163)



(100)



Accrued expenses and other current liabilities

1,094



(258)



895



(3,273)



Deferred revenue and deposits

78



112



87



111



Other liabilities

343



117



527



(438)



Net cash provided by operating activities

14,091



9,828



39,579



24,707



Cash flows from investing activities









Purchases of property and equipment

(4,313)



(3,689)



(13,198)



(10,502)



Purchases of marketable securities

(7,786)



(14,130)



(24,314)



(28,193)



Sales of marketable securities

8,993



4,398



15,331



9,779



Maturities of marketable securities

2,991



2,857



9,318



10,725



Purchases of equity investments

(27)



(6,020)



(46)



(6,302)



Acquisitions of businesses, net of cash acquired, and purchases of intangible assets

(71)



(12)



(330)



(384)



Other investing activities

(117)



(3)



(160)



(9)



Net cash used in investing activities

(330)



(16,599)



(13,399)



(24,886)



Cash flows from financing activities









Taxes paid related to net share settlement of equity awards

(1,576)



(1,000)



(4,007)



(2,444)



Repurchases of Class A common stock

(13,457)



(1,725)



(24,476)



(4,343)



Principal payments on finance leases

(231)



(189)



(505)



(398)



Net change in overdraft in cash pooling entities

11



(8)



15



(24)



Other financing activities



10



(13)



124



Net cash used in financing activities

(15,253)



(2,912)



(28,986)



(7,085)



Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(215)



93



(344)



(36)



Net decrease in cash, cash equivalents, and restricted cash

(1,707)



(9,590)



(3,150)



(7,300)



Cash, cash equivalents, and restricted cash at beginning of the period

16,511



21,569



17,954



19,279



Cash, cash equivalents, and restricted cash at end of the period

$

14,804



$

11,979



$

14,804



$

11,979












Reconciliation of cash, cash equivalents, and restricted cash to the









condensed consolidated balance sheets









Cash and cash equivalents

$

14,496



$

11,617



$

14,496



$

11,617



Restricted cash, included in prepaid expenses and other current assets

195



222



195



222



Restricted cash, included in other assets

113



140



113



140



Total cash, cash equivalents, and restricted cash

$

14,804



$

11,979



$

14,804



$

11,979



FACEBOOK, INC.


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In millions)


(Unaudited)





Three Months Ended
September 30,


Nine Months Ended
September 30,



2021


2020


2021


2020


Supplemental cash flow data









Cash paid for income taxes

$

1,625



$

1,872



$

7,919



$

3,122



Non-cash investing and financing activities:









Property and equipment in accounts payable and accrued expenses

$

2,635



$

2,137



$

2,635



$

2,137



and other current liabilities

















Acquisition of businesses in accrued expenses and other current

$

73



$

118



$

73



$

118



liabilities and other liabilities

















Other current assets through financing arrangement in accrued expenses

$

491



$



$

491



$



and other current liabilities

















Repurchases of Class A common stock in accrued expenses and other

$

1,223



$

55



$

1,223



$

55



current liabilities

















Reconciliation of GAAP to Non-GAAP Results


(In millions, except percentages)


(Unaudited)





Three Months Ended
September 30,


Nine Months Ended
September 30,



2021


2020


2021


2020


GAAP revenue

$

29,010


$

21,470


$

84,258


$

57,893


Foreign exchange effect on 2021 revenue using 2020 rates

(259)





(1,947)




Revenue excluding foreign exchange effect

$

28,751




$

82,311





GAAP revenue year-over-year change %

35%




46%





Revenue excluding foreign exchange effect year-over-year change %

34%




42%





GAAP advertising revenue

$

28,276


$

21,221


$

82,294


$

56,981


Foreign exchange effect on 2021 advertising revenue using 2020 rates

(256)




(1,926)





Advertising revenue excluding foreign exchange effect

$

28,020




$

80,368





GAAP advertising revenue year-over-year change %

33%




44%





Advertising revenue excluding foreign exchange effect year-over-year change %

32%




41%














Net cash provided by operating activities

$

14,091


$

9,828


$

39,579


$

24,707


Purchases of property and equipment

(4,313)


(3,689)


(13,198)



(10,502)


Principal payments on finance leases

(231)


(189)


(505)



(398)


Free cash flow (1)

$

9,547


$

5,950


$

25,876


$

13,807















(1) Free cash flow in the nine months ended September 30, 2020 reflects the $5.0 billion FTC settlement that was paid in April 2020.

Cision View original content to download multimedia: https://www.prnewswire.com/news-releases/facebook-reports-third-quarter-2021-results-301407881.html

SOURCE Facebook

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