Facebook Q2 2017 Results investor.fb.com Daily Active Users (DAUs) - PowerPoint PPT Presentation

Facebook Q2 2017 Results investor.fb.com

Daily Active Users (DAUs) In Millions Rest of World 1,325 1,284 Asia-Pacific 1,227 Europe 1,179 US & Canada 1,128 1,090 419 408 1,038 1,007 388 968 377 355 340 319 308 292 453 427 396 368 346 329 309 300 285 267 271 262 256 249 252 240 233 228 178 180 182 183 167 169 173 175 164 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 DAUs / MAUs Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 65% 65% 65% 66% 66% 66% 66% 66% 66% Please see Facebook's most recent quarterly report filed with the SEC for definitions of user activity used to determine the number of our DAUs and MAUs. The numbers for DAUs and MAUs do not include Instagram, WhatsApp, or Oculus users unless they would otherwise qualify as such users, respectively, based on their other activities on Facebook. 2

Monthly Active Users (MAUs) In Millions 2,006 Rest of World 1,936 Asia-Pacific 1,860 1,788 Europe 1,712 US & Canada 1,654 654 1,591 632 1,545 606 1,490 587 556 533 509 492 471 756 716 673 629 592 566 540 522 496 360 354 349 342 338 333 323 315 311 236 226 229 231 234 217 219 222 213 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Please see Facebook's most recent quarterly report filed with the SEC for definitions of user activity used to determine the number of our DAUs and MAUs. The numbers for DAUs and MAUs do not include Instagram, WhatsApp, or Oculus users unless they would otherwise qualify as such users, respectively, based on their other activities on Facebook. 3

Revenue In Millions $9,321 Payments and Other Fees $8,809 $157 Advertising $180 $8,032 $175 $7,011 $195 $6,436 $197 $5,841 $5,382 $204 $181 $4,501 $9,164 $4,042 $8,629 $202 $7,857 $215 $6,816 $6,239 $5,637 $5,201 $4,299 $3,827 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 4

Revenue by User Geography In Millions Rest of World $9,321 Asia-Pacific $8,809 $954 Europe $839 $8,032 US & Canada $784 $1,569 $7,011 $1,349 $6,436 $692 $1,375 $5,841 $614 $1,154 $2,242 $5,382 $2,065 $550 $1,025 $473 $1,905 $848 $4,501 $862 $1,605 $4,042 $451 $1,585 $415 $709 $1,456 $1,307 $623 $1,085 $1,037 $4,556 $4,556 $3,968 $3,560 $3,212 $2,987 $2,740 $2,256 $1,967 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform a revenue- generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financial statements where revenue is geographically apportioned based on the location of the marketer or developer. In late 2015, we discovered an error in the algorithm we used to attribute our revenue by user geography. While this issue did not affect our overall worldwide revenue, it did affect our attribution of revenue to different geographic regions. The fourth quarter of 2015 revenue by user geography for all regions was adjusted to reflect this reclassification. 5

Advertising Revenue by User Geography In Millions $9,164 Rest of World $8,629 Asia-Pacific $947 Europe $832 $7,857 US & Canada $776 $1,558 $1,337 $6,816 $6,239 $685 $1,361 $608 $5,637 $1,137 $2,209 $5,201 $2,025 $544 $1,009 $467 $1,869 $833 $4,299 $849 $1,563 $3,827 $444 $1,545 $409 $1,413 $694 $1,270 $605 $1,041 $987 $4,435 $4,450 $3,851 $3,431 $3,077 $2,847 $2,615 $2,120 $1,826 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform a revenue- generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financial statements where revenue is geographically apportioned based on the location of the marketer or developer. In late 2015, we discovered an error in the algorithm we used to attribute our revenue by user geography. While this issue did not affect our overall worldwide revenue, it did affect our attribution of revenue to different geographic regions. The fourth quarter of 2015 revenue by user geography for all regions was adjusted to reflect this reclassification. 6

Payments & Other Fees Revenue by User Geography In Millions Rest of World Asia-Pacific Europe US & Canada $215 $204 $202 $6 $197 $195 $18 $6 $7 $6 $181 $15 $180 $7 $15 $175 $16 $17 $6 $7 $8 $13 $12 $157 $50 $43 $14 $44 $40 $7 $42 $11 $37 $40 $36 $33 $141 $140 $136 $135 $129 $125 $121 $117 $106 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform a revenue- generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financial statements where revenue is geographically apportioned based on the location of the marketer or developer. In late 2015, we discovered an error in the algorithm we used to attribute our revenue by user geography. While this issue did not affect our overall worldwide revenue, it did affect our attribution of revenue to different geographic regions. The fourth quarter of 2015 revenue by user geography was adjusted to reflect this reclassification. 7

Average Revenue per User (ARPU) Payments and Other Fees US & Canada Worldwide Advertising $19.81 $19.38 $0.53 $17.07 $0.45 $15.65 $0.50 $14.34 $0.57 $4.83 $4.73 $0.60 $4.23 $4.01 $0.10 $0.08 $3.82 $19.28 $18.93 $0.09 $0.11 $0.12 $16.56 $15.08 $13.74 $4.73 $4.65 $4.14 $3.89 $3.71 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Europe Asia-Pacific Rest of World $6.28 $5.98 $0.09 $5.42 $0.12 $4.72 $4.72 $0.10 $2.13 $2.07 $1.98 $0.12 $0.12 $1.89 $0.01 $1.48 $1.77 $0.02 $1.41 $0.02 $0.03 $1.27 $0.03 $1.21 $0.01 $6.19 $1.13 $5.86 $0.01 $5.32 $0.01 $0.01 $4.61 $0.01 $4.60 $2.12 $2.05 $1.96 $1.86 $1.74 $1.47 $1.39 $1.25 $1.20 $1.12 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform a revenue-generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financial statements where revenue is geographically apportioned based on the location of the marketer or developer. Please see Facebook’s most recent quarterly report filed with the SEC for the definition of ARPU. 8

Expenses as a % of Revenue Cost of Revenue Research & Development 23% 23% 22% 21% 18% 14% 14% 14% 13% 12% Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Marketing & Sales General & Administrative 14% 13% 13% 13% 12% 8% 7% 6% 6% 6% Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 In the fourth quarter of 2016, we elected to early adopt the Financial Accounting Standards Board (FASB)'s Accounting Standards Update No. 2016-09, Compensation Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting (ASU 2016-09). As such, quarterly expenses for and following 2016 include the impact of ASU 2016-09 adoption. See ASU 2016-09 Adoption in the Appendix for additional information. 9

Income from Operations In Millions $4,566 $4,401 $3,327 $3,117 $2,734 $2,560 $2,010 $1,459 $1,273 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 In the fourth quarter of 2016, we elected to early adopt ASU 2016-09. As such, quarterly income from operations for and following 2016 include the impact of ASU 2016-09 adoption. See ASU 2016-09 Adoption in the Appendix for additional information. 10

Operating Margin 52% 47% 44% 44% 42% 41% 37% 32% 31% Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 In the fourth quarter of 2016, we elected to early adopt ASU 2016-09. As such, quarterly operating margin for and following 2016 include the impact of ASU 2016-09 adoption. See ASU 2016-09 Adoption in the Appendix for additional information. 11

Effective Tax Rate ($ in millions) Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Income before provision for income taxes $ 1,273 $ 1,432 $ 2,557 $ 2,066 $ 2,754 $ 3,164 $ 4,533 $ 3,408 $ 4,488 Provision for income taxes 554 536 995 328 471 537 965 344 594 Effective Tax Rate 44% 37% 39% 16% 17% 17% 21% 10% 13% In the fourth quarter of 2016, we elected to early adopt ASU 2016-09. As such, quarterly effective tax rates for and following 2016 include the impact of ASU 2016-09 adoption. See ASU 2016-09 Adoption in the Appendix for additional information. 12

Net Income In Millions $3,894 $3,568 $3,064 $2,627 $2,283 $1,738 $1,562 $896 $719 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 In the fourth quarter of 2016, we elected to early adopt ASU 2016-09. As such, quarterly net income for and following 2016 include the impact of ASU 2016-09 adoption. See ASU 2016-09 Adoption in the Appendix for additional information. 13