8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549 

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 or 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 27, 2019

Facebook, Inc.

(Exact name of registrant as specified in its charter)

Delaware	001-35551	20-1665019
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1601 Willow Road, Menlo Park, California 94025

(Address of principal executive offices and Zip Code)

(650) 543-4800

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.000006 par value	FB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.	☐

Item 2.02 Results of Operations and Financial Condition.

On October 30, 2019, Facebook, Inc. ("Facebook") issued a press release and will hold a conference call regarding its financial results for the quarter ended September 30, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report.

The information furnished with this Item 2.02, including Exhibit 99.1, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Facebook is making reference to non-GAAP financial information in both the press release and the conference call. A reconciliation of GAAP to non-GAAP results is provided in the attached Exhibit 99.1 press release.

Facebook uses the investor.fb.com and newsroom.fb.com websites as well as Mark Zuckerberg's Facebook Page (https://www.facebook.com/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) On October 27, 2019, Susan D. Desmond-Hellmann informed Facebook that she will resign as a member of the Board of Directors of Facebook (the "Board"), effective as of October 30, 2019. Dr. Desmond-Hellmann's decision to resign was based on personal reasons and was not due to any disagreement with Facebook on any matter relating to its operations, policies or practices.

Item 8.01 Other Events.

The Board has appointed Marc L. Andreessen to replace Dr. Desmond-Hellmann as a member of the Compensation & Governance Committee of the Board (the "Compensation & Governance Committee"), effective as of October 30, 2019. Facebook's independent directors did not immediately appoint a new lead independent director of the Board but expect to name a replacement over the coming months.

In addition, on October 30, 2019, the Board amended the charter (the "Charter") of the Compensation & Governance Committee to incorporate certain nominating functions and re-named the committee as the Compensation, Nominating & Governance Committee. The Charter is available on the investor.fb.com website.

A copy of the press release regarding these matters is attached as Exhibit 99.2 to this report.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number	Exhibit Title or Description
99.1	Press release dated October 30, 2019
99.2	Press release dated October 30, 2019
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the inline XBRL document)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		FACEBOOK, INC.
Date:	October 30, 2019	By:	/s/ David Kling
			Name: David Kling
			Title: Vice President, Deputy General Counsel and Secretary

EX-99.1

Facebook Reports Third Quarter 2019 Results

MENLO PARK, Calif. – October 30, 2019 – Facebook, Inc. (Nasdaq: FB) today reported financial results for the quarter ended September 30, 2019.

"We had a good quarter and our community and business continue to grow," said Mark Zuckerberg, Facebook founder and CEO. "We are focused on making progress on major social issues and building new experiences that improve people's lives around the world."

Third Quarter 2019 Financial Highlights

	Three Months Ended September 30,						Year-over-Year % Change
In millions, except percentages and per share amounts	2019			2018
Revenue:
Advertising	$	17,383		$	13,539		28	%
Payments and other fees	269			188			43	%
Total revenue	17,652			13,727			29	%
Total costs and expenses	10,467			7,946			32	%
Income from operations	$	7,185		$	5,781		24	%
Operating margin	41		%	42		%
Provision for income taxes	$	1,238
Effective tax rate	17		%
Net income	$	6,091		$	5,137		19	%
Diluted earnings per share (EPS)	$	2.12		$	1.76		20	%

Third Quarter 2019Operational and Other Financial Highlights

• Daily active users (DAUs) – DAUs were 1.62 billion on average for September 2019, an increase of 9% year-over-year.

• Monthly active users (MAUs) – MAUs were 2.45 billion as of September 30, 2019, an increase of 8% year-over-year.

• Mobile advertising revenue – Mobile advertising revenue represented approximately 94% of advertising revenue for the third quarter of 2019, up from approximately 92% of advertising revenue in the third quarter of 2018.

• Capital expenditures – Capital expenditures, including principal payments on finance leases, were $3.68 billion for the third quarter of 2019.

• Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $52.27 billion as of September 30, 2019.

• Headcount – Headcountwas 43,030 as of September 30, 2019, an increase of 28% year-over-year.

In addition, we estimate that around 2.2 billion people now use Facebook, Instagram, WhatsApp, or Messenger (our "Family" of services) every day on average, and around 2.8 billion people use at least one of our Family of services each month.

1

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 newsroom.fb.com websites as well as Mark Zuckerberg's Facebook Page (https://www.facebook.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 (404) 537-3406 or +1 (855) 859-2056, conference ID 9647087.

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 to stay connected with friends and family, to discover what's going on in the world, and to share and express what matters to them.

Contacts

Investors:

Deborah Crawford

investor@fb.com / investor.fb.com

Press:

Bertie Thomson

press@fb.com / newsroom.fb.com

2

Forward-Looking Statements

This press release contains forward-looking statements regarding our future business expectations. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our dependency on 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 user growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing 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 25, 2019, 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, 2019. In addition, please note that the date of this press release is October 30, 2019, 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, 2019 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, net; Principal payments on finance leases. We subtract both net 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.

3

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,
	2019		2018		2019		2018
Revenue	$	17,652	$	13,727	$	49,615	$	38,924
Costs and expenses:
Cost of revenue	3,155		2,418		9,279		6,559
Research and development	3,548		2,657		9,722		7,418
Marketing and sales	2,416		1,928		6,850		5,379
General and administrative	1,348		943		8,636		2,475
Total costs and expenses	10,467		7,946		34,487		21,831
Income from operations	7,185		5,781		15,128		17,093
Interest and other income, net	144		131		515		297
Income before provision for income taxes	7,329		5,912		15,643		17,390
Provision for income taxes	1,238		775		4,507		2,160
Net income	$	6,091	$	5,137	$	11,136	$	15,230
Less: Net income attributable to participating securities	—		—		—		(1		)
Net income attributable to Class A and Class B common stockholders	$	6,091	$	5,137	$	11,136	$	15,229
Earnings per share attributable to Class A and Class B common stockholders:
Basic	$	2.13	$	1.78	$	3.90	$	5.26
Diluted	$	2.12	$	1.76	$	3.87	$	5.20
Weighted-average shares used to compute earnings per share attributable to Class A and Class B common stockholders:
Basic	2,854		2,885		2,855		2,895
Diluted	2,874		2,913		2,875		2,931
Share-based compensation expense included in costs and expenses:
Cost of revenue	$	91	$	72	$	287	$	202
Research and development	907		748		2,557		2,347
Marketing and sales	148		133		421		380
General and administrative	103		87		297		251
Total share-based compensation expense	$	1,249	$	1,040	$	3,562	$	3,180

4

FACEBOOK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)
			September 30, 2019			December 31, 2018
Assets
Current assets:
	Cash and cash equivalents		$	15,979		$	10,019
	Marketable securities		36,290			31,095
	Accounts receivable, net of allowances of $301 and $229 as of September 30, 2019 and December 31, 2018, respectively		7,673			7,587
	Prepaid expenses and other current assets		2,137			1,779
		Total current assets	62,079			50,480
Property and equipment, net			32,284			24,683
Operating lease right-of-use assets, net			8,403			—
Intangible assets, net			853			1,294
Goodwill			18,338			18,301
Other assets			2,461			2,576
Total assets			$	124,418		$	97,334
Liabilities and stockholders' equity
Current liabilities:
	Accounts payable		$	860		$	820
	Partners payable		590			541
	Operating lease liabilities, current		776			—
	Accrued expenses and other current liabilities		10,877			5,509
	Deferred revenue and deposits		225			147
		Total current liabilities	13,328			7,017
Operating lease liabilities, non-current			8,356			—
Other liabilities			8,735			6,190
		Total liabilities	30,419			13,207
Commitments and contingencies
Stockholders' equity:
	Common stock and additional paid-in capital		45,059			42,906
	Accumulated other comprehensive loss		(849		)	(760		)
	Retained earnings		49,789			41,981
		Total stockholders' equity	93,999			84,127
Total liabilities and stockholders' equity			$	124,418		$	97,334

5

FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Cash flows from operating activities
Net income	$	6,091		$	5,137		$	11,136		$	15,230
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,416			1,107			4,273			3,090
Share-based compensation	1,249			1,040			3,562			3,180
Deferred income taxes	175			30			358			83
Other	30			3			44			19
Changes in assets and liabilities:
Accounts receivable	(328		)	(489		)	(264		)	(328		)
Prepaid expenses and other current assets	(360		)	8			(527		)	(889		)
Other assets	—			(40		)	66			(99		)
Operating lease right-of-use assets	(1,179		)	—			(2,890		)	—
Accounts payable	89			37			2			88
Partners payable	39			63			59			116
Accrued expenses and other current liabilities	457			350			6,439			1,044
Deferred revenue and deposits	31			24			82			20
Operating lease liabilities, non-current	1,276			—			2,914			—
Other liabilities	321			226			1,977			102
Net cash provided by operating activities	9,307			7,496			27,231			21,656
Cash flows from investing activities
Purchases of property and equipment, net	(3,532		)	(3,343		)	(11,002		)	(9,614		)
Purchases of marketable securities	(7,397		)	(4,375		)	(19,152		)	(12,658		)
Sales of marketable securities	2,946			2,492			7,402			11,104
Maturities of marketable securities	2,943			1,053			7,048			3,391
Other investing activities, net	(10		)	(75		)	(124		)	(141		)
Net cash used in investing activities	(5,050		)	(4,248		)	(15,828		)	(7,918		)
Cash flows from financing activities
Taxes paid related to net share settlement of equity awards	(591		)	(905		)	(1,710		)	(2,663		)
Repurchases of Class A common stock	(1,148		)	(4,256		)	(2,906		)	(9,379		)
Principal payments on finance leases	(144		)	—			(411		)	—
Net change in overdraft in cash pooling entities	(141		)	—			(260		)	—
Other financing activities, net	5			3			14			11
Net cash used in financing activities	(2,019		)	(5,158		)	(5,273		)	(12,031		)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(156		)	(14		)	(174		)	(167		)
Net increase (decrease) in cash, cash equivalents, and restricted cash	2,082			(1,924		)	5,956			1,540
Cash, cash equivalents, and restricted cash at beginning of the period	13,998			11,668			10,124			8,204
Cash, cash equivalents, and restricted cash at end of the period	$	16,080		$	9,744		$	16,080		$	9,744
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents	$	15,979		$	9,637		$	15,979		$	9,637
Restricted cash, included in prepaid expenses and other current assets	7			7			7			7
Restricted cash, included in other assets	94			100			94			100
Total cash, cash equivalents, and restricted cash	$	16,080		$	9,744		$	16,080		$	9,744

6

FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019			2018
Supplemental cash flow data
Cash paid during the period for:
Interest	$	4	$	—	$	9		$	—
Income taxes, net	$	832	$	447	$	2,528		$	2,728
Non-cash investing activities:
Net change in prepaids and liabilities related to property and equipment	$	144	$	382	$	(59	)	$	613
Property and equipment in accounts payable and accrued liabilities	$	1,850	$	1,504	$	1,850		$	1,504

7

Reconciliation of GAAP to Non-GAAP Results
(In millions, except percentages)
(Unaudited)
	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
GAAP revenue	$	17,652		$	13,727		$	49,615		$	38,924
Foreign exchange effect on 2019 revenue using 2018 rates	297						1,374
Revenue excluding foreign exchange effect	$	17,949					$	50,989
GAAP revenue year-over-year change %	29		%				27		%
Revenue excluding foreign exchange effect year-over-year change %	31		%				31		%
GAAP advertising revenue	$	17,383		$	13,539		$	48,919		$	38,373
Foreign exchange effect on 2019 advertising revenue using 2018 rates	295						1,370
Advertising revenue excluding foreign exchange effect	$	17,678					$	50,289
GAAP advertising revenue year-over-year change %	28		%				27		%
Advertising revenue excluding foreign exchange effect year-over-year change %	31		%				31		%
Net cash provided by operating activities	$	9,307		$	7,496		$	27,231		$	21,656
Purchases of property and equipment, net	(3,532		)	(3,343		)	(11,002		)	(9,614		)
Principal payments on finance leases	(144		)	—			(411		)	—
Free cash flow	$	5,631		$	4,153		$	15,818		$	12,042

8

EX-99.2

Dr. Susan Desmond-Hellmann Departs Facebook Board of Directors

MENLO PARK, Calif., October 30, 2019 – Facebook today announced that Dr. Susan Desmond-Hellmann, the CEO of the Bill and Melinda Gates Foundation, is stepping down from the company's board of directors, effective October 30, 2019.

Mark Zuckerberg, Facebook founder and CEO said, "Sue has been a wonderful and thoughtful voice on the board for six years, and I'm personally grateful to her for everything she has done for this company."

Dr. Desmond-Hellmann joined Facebook's board in March 2013 and served as Lead Independent Director from June 2015. In a letter to Mark Zuckerberg discussing the reasons for her departure, Dr. Desmond-Hellmann said: "I remain positive about Facebook and the mission to give people the power to build community and bring the world closer together. Facebook's Shareholders require a Board of Directors that is fully engaged and committed to address the critical issues confronting Facebook at this time. 

Unfortunately, increasing demands from my CEO role, my extended family, and my own health make it no longer possible for me to commit the necessary time and energy required to properly serve Facebook and its shareholders. I wish you and the management team, Facebook's employees, my fellow Directors, and Facebook shareholders best wishes for future success."

Facebook's independent directors expect to name a replacement Lead Independent Director over the coming months. The board's Compensation & Governance Committee, which will consist of Marc Andreessen and Peter Thiel, will assist in this process. In addition, the Board of Directors is expanding the committee's charter to incorporate a director nominating function that will empower the committee to lead the board's efforts to identify and nominate director candidates in the future.

Facebook's current board members are: Mark Zuckerberg; Peggy Alford, Senior Vice President, Core Markets, PayPal Holdings, Inc.; Marc L. Andreessen, Co-founder and General Partner, Andreessen Horowitz; Kenneth I. Chenault, Chairman and Managing Director, General Catalyst; Sheryl K. Sandberg, Chief Operating Officer, Facebook; Peter A. Thiel, Co-founder and Partner, Founders Fund; and Jeffrey D. Zients, CEO, The Cranemere Group.

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 to stay connected with friends and family, to discover what's going on in the world, and to share and express what matters to them.

Press:

Bertie Thomson

press@fb.com / newsroom.fb.com

XML

Cover Page Cover Page	Oct. 27, 2019
Cover page.
Document Type	8-K
Document Period End Date	Oct. 27, 2019
Entity Registrant Name	Facebook Inc
Entity Incorporation, State or Country Code	DE
Entity File Number	001-35551
Entity Tax Identification Number	20-1665019
Entity Address, Address Line One	1601 Willow Road
Entity Address, City or Town	Menlo Park
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94025
City Area Code	650
Local Phone Number	543-4800
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Class A Common Stock, $0.000006 par value
Trading Symbol	FB
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Entity Central Index Key	0001326801
Amendment Flag	false