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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________ 

FORM 10-Q
____________________________________________ 
(Mark One)
  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from            to            
Commission File Number: 001-35551
____________________________________________ 
meta-20220930_g1.jpg
Meta Platforms, Inc.
(Exact name of registrant as specified in its charter)
____________________________________________ 
Delaware20-1665019
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification Number)
1601 Willow Road, Menlo Park, California 94025
(Address of principal executive offices and Zip Code)

(650543-4800
(Registrant's telephone number, including area code)
 ____________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.000006 par valueMETAThe Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (Exchange Act) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
Indicate the number of shares outstanding of each of the issuer's classes of Common Stock, as of the latest practicable date.
ClassNumber of Shares Outstanding
Class A Common Stock $0.000006 par value2,248,672,204 shares outstanding as of October 21, 2022
Class B Common Stock $0.000006 par value402,876,470 shares outstanding as of October 21, 2022




Meta Platforms, Inc.

Form 10-Q
For the Quarterly Period Ended September 30, 2022

TABLE OF CONTENTS

  Page 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
2



Table of Contents
NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part II, Item 1A, "Risk Factors" in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward‑looking statements.

We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward‑looking statements.

Unless expressly indicated or the context requires otherwise, the terms "Meta," "company," "we," "us," and "our" in this document refer to Meta Platforms, Inc., a Delaware corporation, and, where appropriate, its subsidiaries. The term "Family" refers to our Facebook, Instagram, Messenger, and WhatsApp products. For references to accessing Meta's products on the "web" or via a "website," such terms refer to accessing such products on personal computers. For references to accessing Meta's products on "mobile," such term refers to accessing such products via a mobile application or via a mobile-optimized version of our websites such as m.facebook.com, whether on a mobile phone or tablet.
3



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LIMITATIONS OF KEY METRICS AND OTHER DATA

The numbers for our key metrics are calculated using internal company data based on the activity of user accounts. We have historically reported the numbers of our daily active users (DAUs), monthly active users (MAUs), and average revenue per user (ARPU) (collectively, our "Facebook metrics") based on user activity only on Facebook and Messenger and not on our other products. Beginning with our Annual Report on Form 10-K for the year ended December 31, 2019, we also report our estimates of the numbers of our daily active people (DAP), monthly active people (MAP), and average revenue per person (ARPP) (collectively, our "Family metrics") based on the activity of users who visited at least one of Facebook, Instagram, Messenger, and WhatsApp (collectively, our "Family" of products) during the applicable period of measurement. We believe our Family metrics better reflect the size of our community and the fact that many people are using more than one of our products. As a result, over time we intend to report our Family metrics as key metrics in place of DAUs, MAUs, and ARPU in our periodic reports filed with the Securities and Exchange Commission.

While these numbers are based on what we believe to be reasonable estimates of our user base for the applicable period of measurement, there are inherent challenges in measuring usage of our products across large online and mobile populations around the world. The methodologies used to measure these metrics require significant judgment and are also susceptible to algorithm or other technical errors. In addition, we are continually seeking to improve our estimates of our user base, and such estimates may change due to improvements or changes in our methodology. We regularly review our processes for calculating these metrics, and from time to time we discover inaccuracies in our metrics or make adjustments to improve their accuracy, which can result in adjustments to our historical metrics. Our ability to recalculate our historical metrics may be impacted by data limitations or other factors that require us to apply different methodologies for such adjustments. We generally do not intend to update previously disclosed Family metrics for any such inaccuracies or adjustments that are within the error margins disclosed below.

In addition, our Family metrics and Facebook metrics estimates will differ from estimates published by third parties due to differences in methodology.

Family Metrics

Many people in our community have user accounts on more than one of our products, and some people have multiple user accounts within an individual product. Accordingly, for our Family metrics, we do not seek to count the total number of user accounts across our products because we believe that would not reflect the actual size of our community. Rather, our Family metrics represent our estimates of the number of unique people using at least one of Facebook, Instagram, Messenger, and WhatsApp. We do not require people to use a common identifier or link their accounts to use multiple products in our Family, and therefore must seek to attribute multiple user accounts within and across products to individual people. To calculate these metrics, we rely upon complex techniques, algorithms and machine learning models that seek to count the individual people behind user accounts, including by matching multiple user accounts within an individual product and across multiple products when we believe they are attributable to a single person, and counting such group of accounts as one person. These techniques and models require significant judgment, are subject to data and other limitations discussed below, and inherently are subject to statistical variances and uncertainties. We estimate the potential error in our Family metrics primarily based on user survey data, which itself is subject to error as well. While we expect the error margin for our Family metrics to vary from period to period, we estimate that such margin generally will be approximately 3% of our worldwide MAP. At our scale, it is very difficult to attribute multiple user accounts within and across products to individual people, and it is possible that the actual numbers of unique people using our products may vary significantly from our estimates, potentially beyond our estimated error margins. As a result, it is also possible that our Family metrics may indicate changes or trends in user numbers that do not match actual changes or trends.

To calculate our estimates of Family DAP and MAP, we currently use a series of machine learning models that are developed based on internal reviews of limited samples of user accounts and calibrated against user survey data. We apply significant judgment in designing these models and calculating these estimates. For example, to match user accounts within individual products and across multiple products, we use data signals such as similar device information, IP addresses, and user names. We also calibrate our models against data from periodic user surveys of varying sizes and frequency across our products, which are inherently subject to error. The timing and results of such user surveys have in the past contributed, and may in the future contribute, to changes in our reported Family metrics from period to period. In addition, our data limitations may affect our understanding of certain details of our business and increase the risk of error for our Family metrics estimates.
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Our techniques and models rely on a variety of data signals from different products, and we rely on more limited data signals for some products compared to others. For example, as a result of limited visibility into encrypted products, we have fewer data signals from WhatsApp user accounts and primarily rely on phone numbers and device information to match WhatsApp user accounts with accounts on our other products. Similarly, although Messenger Kids users are included in our Family metrics, we do not seek to match their accounts with accounts on our other applications for purposes of calculating DAP and MAP. Any loss of access to data signals we use in our process for calculating Family metrics, whether as a result of our own product decisions, actions by third-party browser or mobile platforms, regulatory or legislative requirements, or other factors, also may impact the stability or accuracy of our reported Family metrics, as well as our ability to report these metrics at all. Our estimates of Family metrics also may change as our methodologies evolve, including through the application of new data signals or technologies, product changes, or other improvements in our user surveys, algorithms, or machine learning that may improve our ability to match accounts within and across our products or otherwise evaluate the broad population of our users. In addition, such evolution may allow us to identify previously undetected violating accounts (as defined below).

We regularly evaluate our Family metrics to estimate the percentage of our MAP consisting solely of "violating" accounts. We define "violating" accounts as accounts which we believe are intended to be used for purposes that violate our terms of service, including bots and spam. In the fourth quarter of 2021, we estimated that approximately 3% of our worldwide MAP consisted solely of violating accounts. Such estimation is based on an internal review of a limited sample of accounts, and we apply significant judgment in making this determination. For example, we look for account information and behaviors associated with Facebook and Instagram accounts that appear to be inauthentic to the reviewers, but we have limited visibility into WhatsApp user activity due to encryption. In addition, if we believe an individual person has one or more violating accounts, we do not include such person in our violating accounts estimation as long as we believe they have one account that does not constitute a violating account. From time to time, we disable certain user accounts, make product changes, or take other actions to reduce the number of violating accounts among our users, which may also reduce our DAP and MAP estimates in a particular period. We intend to disclose our estimates of the percentage of our MAP consisting solely of violating accounts on an annual basis. Violating accounts are very difficult to measure at our scale, and it is possible that the actual number of violating accounts may vary significantly from our estimates.

The numbers of Family DAP and MAP discussed in this Quarterly Report on Form 10-Q, as well as ARPP, do not include users on our other products, unless they would otherwise qualify as DAP or MAP, respectively, based on their other activities on our Family products.

Facebook Metrics

We regularly evaluate our Facebook metrics to estimate the number of "duplicate" and "false" accounts among our MAUs. A duplicate account is one that a user maintains in addition to his or her principal account. We divide "false" accounts into two categories: (1) user-misclassified accounts, where users have created personal profiles for a business, organization, or non-human entity such as a pet (such entities are permitted on Facebook using a Page rather than a personal profile under our terms of service); and (2) violating accounts, which represent user profiles that we believe are intended to be used for purposes that violate our terms of service, such as bots and spam. The estimates of duplicate and false accounts are based on an internal review of a limited sample of accounts, and we apply significant judgment in making this determination. For example, to identify duplicate accounts we use data signals such as identical IP addresses and similar user names, and to identify false accounts we look for names that appear to be fake or other behavior that appears inauthentic to the reviewers. Any loss of access to data signals we use in this process, whether as a result of our own product decisions, actions by third-party browser or mobile platforms, regulatory or legislative requirements, or other factors, also may impact the stability or accuracy of our estimates of duplicate and false accounts. Our estimates also may change as our methodologies evolve, including through the application of new data signals or technologies or product changes that may allow us to identify previously undetected duplicate or false accounts and may improve our ability to evaluate a broader population of our users. Duplicate and false accounts are very difficult to measure at our scale, and it is possible that the actual number of duplicate and false accounts may vary significantly from our estimates.

In the fourth quarter of 2021, we estimated that duplicate accounts may have represented approximately 11% of our worldwide MAUs. We believe the percentage of duplicate accounts is meaningfully higher in developing markets such as the Philippines and Vietnam, as compared to more developed markets. In the fourth quarter of 2021, we estimated that false accounts may have represented approximately 5% of our worldwide MAUs. Our estimation of false accounts can vary as a result of episodic spikes in the creation of such accounts, which we have seen originate more frequently in specific countries
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such as Indonesia, Nigeria, and Vietnam. From time to time, we disable certain user accounts, make product changes, or take other actions to reduce the number of duplicate or false accounts among our users, which may also reduce our DAU and MAU estimates in a particular period. We intend to disclose our estimates of the number of duplicate and false accounts among our MAUs on an annual basis.

The numbers of DAUs and MAUs discussed in this Quarterly Report on Form 10-Q, as well as ARPU, do not include users on Instagram, WhatsApp, or our other products, unless they would otherwise qualify as DAUs or MAUs, respectively, based on their other activities on Facebook.

User Geography

Our data regarding the geographic location of our users is estimated based on a number of factors, such as the user's IP address and self-disclosed location. These factors may not always accurately reflect the user's actual location. For example, a user may appear to be accessing Facebook from the location of the proxy server that the user connects to rather than from the user's actual location. The methodologies used to measure our metrics are also susceptible to algorithm or other technical errors, and our estimates for revenue by user location and revenue by user device are also affected by these factors.

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PART I—FINANCIAL INFORMATION
Item 1.Financial Statements
META PLATFORMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except for number of shares and par value)
(Unaudited)
September 30,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents$14,308 $16,601 
Marketable securities27,468 31,397 
Accounts receivable, net11,227 14,039 
Prepaid expenses and other current assets5,312 4,629 
Total current assets58,315 66,666 
Non-marketable equity securities6,528 6,775 
Property and equipment, net73,738 57,809 
Operating lease right-of-use assets13,641 12,155 
Intangible assets, net875 634 
Goodwill20,268 19,197 
Other assets5,529 2,751 
Total assets$178,894 $165,987 
Liabilities and stockholders' equity
Current liabilities:
Accounts payable$3,871 $4,083 
Partners payable975 1,052 
Operating lease liabilities, current1,291 1,127 
Accrued expenses and other current liabilities16,036 14,312 
Deferred revenue and deposits514 561 
Total current liabilities22,687 21,135 
Operating lease liabilities, non-current14,687 12,746 
Long-term debt9,922  
Other liabilities7,504 7,227 
Total liabilities54,800 41,108 
Commitments and contingencies
Stockholders' equity:
Common stock, $0.000006 par value; 5,000 million Class A shares authorized, 2,262 million and 2,328 million shares issued and outstanding, as of September 30, 2022 and December 31, 2021, respectively; 4,141 million Class B shares authorized, 403 million and 413 million shares issued and outstanding, as of September 30, 2022 and December 31, 2021, respectively
  
Additional paid-in capital62,092 55,811 
Accumulated other comprehensive loss(5,054)(693)
Retained earnings67,056 69,761 
Total stockholders' equity124,094 124,879 
Total liabilities and stockholders' equity$178,894 $165,987 
See Accompanying Notes to Condensed Consolidated Financial Statements.
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META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Revenue$27,714 $29,010 $84,444 $84,258 
Costs and expenses:
Cost of revenue5,716 5,771 16,913 16,301 
Research and development9,170 6,316 25,567 17,609 
Marketing and sales3,780 3,554 10,688 9,656 
General and administrative3,384 2,946 8,731 6,524 
Total costs and expenses22,050 18,587 61,899 50,090 
Income from operations5,664 10,423 22,545 34,168 
Interest and other income (expense), net(88)142 125 413 
Income before provision for income taxes5,576 10,565 22,670 34,581 
Provision for income taxes1,181 1,371 4,123 5,496 
Net income$4,395 $9,194 $18,547 $29,085 
Earnings per share attributable to Class A and Class B common stockholders:
Basic$1.64 $3.27 $6.86 $10.27 
Diluted$1.64 $3.22 $6.82 $10.11 
Weighted-average shares used to compute earnings per share attributable to Class A and Class B common stockholders:
Basic2,682 2,814 2,703 2,832 
Diluted2,687 2,859 2,718 2,876 
Share-based compensation expense included in costs and expenses:
Cost of revenue$209 $147 $582 $428 
Research and development2,447 1,849 6,995 5,224 
Marketing and sales260 218 766 631 
General and administrative218 165 641 474 
Total share-based compensation expense$3,134 $2,379 $8,984 $6,757 
See Accompanying Notes to Condensed Consolidated Financial Statements.
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META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions)
(Unaudited)
 
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Net income$4,395 $9,194 $18,547 $29,085 
Other comprehensive loss:
Change in foreign currency translation adjustment, net of tax(1,037)(424)(2,472)(856)
Change in unrealized gain (loss) on available-for-sale investments and other, net of tax(606)(68)(1,889)(278)
Comprehensive income$2,752 $8,702 $14,186 $27,951 
See Accompanying Notes to Condensed Consolidated Financial Statements.
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META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In millions)
(Unaudited)
Three Months Ended September 30, 2022Three Months Ended September 30, 2021
Class A and Class B Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Stockholders' EquityClass A and Class B Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal Stockholders' Equity
SharesPar ValueSharesPar Value
Balances at beginning of period2,697 $ $59,929 $(3,411)$69,249 $125,767 2,826 $ $52,845 $285 $85,097 $138,227 
Issuance of common stock14 — — — — — 11 — — — — — 
Shares withheld related to net share settlement(5)— (971)— (40)(1,011)(4)— (890)— (686)(1,576)
Share-based compensation— — 3,134 — — 3,134 — — 2,379 — — 2,379 
Share repurchases(41)— — — (6,548)(6,548)(40)— — — (14,372)(14,372)
Other comprehensive loss— — — (1,643)— (1,643)— — — (492)— (492)
Net income— — — — 4,395 4,395 — — — — 9,194 9,194 
Balances at end of period2,665 $ $62,092 $(5,054)$67,056 $124,094 2,793 $ $54,334 $(207)$79,233 $133,360 
Nine Months Ended September 30, 2022Nine Months Ended September 30, 2021
Class A and Class B Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive LossRetained EarningsTotal Stockholders' EquityClass A and Class B Common StockAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsTotal Stockholders' Equity
SharesPar ValueSharesPar Value
Balances at beginning of period2,741 $ $55,811 $(693)$69,761 $124,879 2,849 $ $50,018 $927 $77,345 $128,290 
Issuance of common stock39 — — — — — 33 — — — — — 
Shares withheld related to net share settlement(14)— (2,703)— (235)(2,938)(12)— (2,441)— (1,566)(4,007)
Share-based compensation— — 8,984 — — 8,984 — — 6,757 — — 6,757 
Share repurchases(101)— — — (21,017)(21,017)(77)— — — (25,631)(25,631)
Other comprehensive loss— — — (4,361)— (4,361)— — — (1,134)— (1,134)
Net income — — — — 18,547 18,547 — — — — 29,085 29,085 
Balances at end of period2,665 $ $62,092 $(5,054)$67,056 $124,094 2,793 $ $54,334 $(207)$79,233 $133,360 
See Accompanying Notes to Condensed Consolidated Financial Statements.
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META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
 Nine Months Ended September 30,
 20222021
Cash flows from operating activities
Net income$18,547 $29,085 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization6,310 5,953 
Share-based compensation8,984 6,757 
Deferred income taxes(2,113)(139)
Impairment related to leases and leasehold improvements413  
Other71 (161)
Changes in assets and liabilities:
Accounts receivable1,930 (1,072)
Prepaid expenses and other current assets(693)(2,566)
Other assets(160)(184)
Accounts payable(666)560 
Partners payable(12)(163)
Accrued expenses and other current liabilities2,942 895 
Deferred revenue and deposits(35)87 
Other liabilities446 527 
Net cash provided by operating activities35,964 39,579 
Cash flows from investing activities
Purchases of property and equipment(22,388)(13,290)
Proceeds relating to property and equipment190 92 
Purchases of marketable debt securities(8,885)(24,314)
Sales of marketable debt securities9,333 15,331 
Maturities of marketable debt securities1,562 9,318 
Acquisitions of businesses and intangible assets(1,250)(330)
Other investing activities(1)(206)
Net cash used in investing activities(21,439)(13,399)
Cash flows from financing activities
Taxes paid related to net share settlement of equity awards(2,938)(4,007)
Repurchases of Class A common stock(21,093)(24,476)
Proceeds from issuance of long-term debt, net9,921  
Principal payments on finance leases(615)(505)
Net change in overdraft in cash pooling entities(250)15 
Other financing activities(101)(13)
Net cash used in financing activities(15,076)(28,986)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash(1,063)(344)
Net decrease in cash, cash equivalents, and restricted cash(1,614)(3,150)
Cash, cash equivalents, and restricted cash at beginning of the period16,865 17,954 
Cash, cash equivalents, and restricted cash at end of the period$15,251 $14,804 
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents$14,308 $14,496 
Restricted cash, included in prepaid expenses and other current assets232 195 
Restricted cash, included in other assets711 113 
Total cash, cash equivalents, and restricted cash$15,251 $14,804 
See Accompanying Notes to Condensed Consolidated Financial Statements.
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META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended September 30,
20222021
Supplemental cash flow data
Cash paid for income taxes, net$4,647 $7,919 
Non-cash investing and financing activities:
Property and equipment in accounts payable and accrued expenses and other current liabilities$4,130 $2,635 
Acquisition of businesses in accrued expenses and other current liabilities and other liabilities$294 $73 
Other current assets through financing arrangement in accrued expenses and other current liabilities$18 $491 
Repurchases of Class A common stock in accrued expenses and other current liabilities$265 $1,223 
See Accompanying Notes to Condensed Consolidated Financial Statements.
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META PLATFORMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2021.

The condensed consolidated balance sheet as of December 31, 2021 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.

The condensed consolidated financial statements include the accounts of Meta Platforms, Inc., its subsidiaries where we have controlling financial interests, and any variable interest entities for which we are deemed to be the primary beneficiary. All intercompany balances and transactions have been eliminated.

The accompanying condensed consolidated financial statements reflect all normal recurring adjustments that are necessary to present fairly the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year ending December 31, 2022.

Use of Estimates

Preparation of condensed consolidated financial statements in conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, valuation of non-marketable equity securities, income taxes, loss contingencies, including the ultimate resolution of litigation, regulatory matters, and asserted and unasserted claims, valuation of long-lived assets including goodwill, intangible assets, and property and equipment, and their associated estimated useful lives, valuation of purchase commitments, credit losses of available-for-sale debt securities and accounts receivable, fair value of financial instruments and fair value of leases. These estimates are based on management's knowledge about current events, interpretations of regulations, and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.

In connection with our periodic reviews of the estimated useful lives of property and equipment, we extended the estimated average useful lives of a majority of the servers and network assets from four years to 4.5 years, effective the second quarter of 2022, as a result of expected longer refresh cycles in our data centers. The financial impact of this change in estimate was a reduction in depreciation expense of $482 million and an increase in net income of $394 million, or $0.14 per diluted share for the nine months ended September 30, 2022. The impact from the change in our estimates was calculated based on the servers and network assets existing as of the effective date of the change and applying the revised estimated useful lives prospectively.

Significant Accounting Policies

There have been no material changes to our significant accounting policies from our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, certain of which are further discussed below.

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Long-lived Assets

In the third quarter of 2022, we made a decision to sublease, early terminate, or abandon several office buildings under operating leases to align our real property lease arrangements with our anticipated operating needs. As a result, we also began to review the related operating lease right-of-use (ROU) assets and leasehold improvements for impairment under Accounting Standards Codification (ASC) Topic 360.

In connection with the above decision, in the three months ended September 30, 2022, we recorded an impairment loss of $413 million for operating lease ROU assets and leasehold improvements. The impairment loss represents the amount by which the carrying value exceeded the estimated fair value of these assets. Of the total impairment loss, $33 million is included in cost of revenue, $231 million in research and development, $74 million in marketing and sales, and $75 million in general and administrative on our condensed consolidated statements of income during the three months ended September 30, 2022. The impairment loss recorded under our Family of Apps (FoA) segment was $338 million with the remaining $75 million recognized in our Reality Labs (RL) segment. The fair values of the impaired assets were estimated using discounted cash flow models (income approach) based on market participant assumptions with Level 3 inputs. The assumptions used in estimating fair value include the expected downtime prior to the commencement of future subleases, projected sublease income over the remaining lease periods, and discount rates that reflect the level of risk associated with receiving future cash flows.

As we continue to evaluate our real property lease arrangements, we expect to reduce more office space and incur additional impairment charges in the foreseeable future, which may have a material adverse impact on our consolidated financial statements in the aggregate.

Recently Adopted Accounting Pronouncements

On January 1, 2022, we early adopted Accounting Standards Update (ASU) No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (ASU 2021-08), which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with ASC Topic 606, Revenue from Contracts with Customers. The adoption of this new standard did not have a material impact on our condensed consolidated financial statements.

On July 1, 2022, we early adopted ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (ASU 2022-03), which clarifies and amends the guidance of measuring the fair value of equity securities subject to contractual restrictions that prohibit the sale of the equity securities. The adoption of this new standard did not have a material impact on our condensed consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

In November 2021, the Financial Accounting Standards Board (FASB) issued ASU No. 2021-10, Government Assistance (Topic 832): Disclosure by Business Entities about Government Assistance (ASU 2021-10), which requires the disclosure of government assistance received by most business entities relating to: (1) the types of government assistance received; (2) the accounting for such assistance; and (3) the effect of the assistance on a business entity's financial statements. This guidance will be effective for our annual financial statements for the year ended December 31, 2022. The adoption of this new standard will not have a material impact on our condensed consolidated financial statements.

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Note 2. Revenue

Revenue disaggregated by revenue source and by segment consists of the following (in millions). For comparative purposes, amounts in the prior periods have been recast:
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
Advertising$27,237 $28,276 $82,387 $82,294 
Other revenue192 176 624 567 
Family of Apps27,429 28,452 83,011 82,861 
Reality Labs285 558 1,433 1,397 
Total revenue$27,714 $29,010 $84,444 $84,258 

Revenue disaggregated by geography, based on the addresses of our customers, consists of the following (in millions):
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
United States and Canada (1)
$11,966 $12,668 $35,931 $36,716 
Europe (2)
5,996 7,018 19,284 20,622 
Asia-Pacific6,797 6,592 20,480 19,370 
Rest of World (2)
2,955 2,732 8,749 7,550 
Total revenue$27,714 $29,010 $84,444 $84,258 
____________________________________
(1)    United States revenue was $11.29 billion and $11.88 billion for the three months ended September 30, 2022 and 2021, respectively, and $33.81 billion and $34.45 billion for the nine months ended September 30, 2022 and 2021, respectively.
(2)    Europe includes Russia and Turkey, and Rest of World includes Africa, Latin America, and the Middle East.

Our total deferred revenue was $513 million and $596 million as of September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022, we expect $478 million of our deferred revenue to be realized in less than a year.

Note 3. Earnings per Share

We compute earnings per share (EPS) of Class A and Class B common stock using the two-class method. As the liquidation and dividend rights for both Class A and Class B common stock are identical, the undistributed earnings are allocated on a proportionate basis to the weighted-average number of common shares outstanding for the period.

Basic EPS is computed by dividing net income by the weighted-average number of shares of our Class A and Class B common stock outstanding. For the calculation of diluted EPS, net income for basic EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plan.

In addition, the computation of the diluted EPS of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted EPS of Class B common stock does not assume the conversion of those shares to Class A common stock. Diluted EPS is computed by dividing the resulting net income by the weighted-average number of fully diluted common shares outstanding.

For the three and nine months ended September 30, 2022, 119 million and 93 million shares of Class A common stock equivalents of restricted stock units (RSUs), respectively, were excluded from the diluted EPS calculation as including them would have an anti-dilutive effect. RSUs with anti-dilutive effect were not material for the three and nine months ended September 30, 2021.

Basic and diluted EPS are the same for each class of common stock because they are entitled to the same liquidation and dividend rights.
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The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts): 
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
 Class AClass BClass AClass BClass AClass BClass AClass B
Basic EPS:
Numerator
Net income$3,729 $666 $7,782 $1,412 $15,736 $2,811 $24,588 $4,497 
Denominator
Shares used in computation of basic earnings per share2,276 406 2,382 432 2,293 410 2,394 438 
Basic EPS$1.64 $1.64 $3.27 $3.27 $6.86 $6.86 $10.27 $10.27 
Diluted EPS:
Numerator
Net income$3,729 $666 $7,782 $1,412 $15,736 $2,811 $24,588 $4,497 
Reallocation of net income as a result of conversion of Class B to Class A common stock666  1,412  2,811  4,497  
Reallocation of net income to Class B common stock (1) (22) (16) (69)
Net income for diluted EPS$4,395 $665 $9,194 $1,390 $18,547 $2,795 $29,085 $4,428 
Denominator
Shares used in computation of basic earnings per share2,276 406 2,382 432 2,293 410 2,394 438 
Conversion of Class B to Class A common stock406  432  410  438  
Weighted-average effect of dilutive RSUs5  45  15  44  
Shares used in computation of diluted earnings per share2,687 406 2,859 432 2,718 410 2,876 438 
Diluted EPS$1.64 $1.64 $3.22 $3.22 $6.82 $6.82 $10.11 $10.11 
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Note 4. Cash, Cash Equivalents, Marketable Securities, and Restricted Cash

The following table sets forth the cash, cash equivalents, and marketable securities by major security type, and restricted cash (in millions):
September 30, 2022December 31, 2021
Cash and cash equivalents:
Cash$6,160 $7,308 
Money market funds6,789 8,850 
U.S. government securities752 25 
U.S. government agency securities155 108 
Certificates of deposit and time deposits435 250 
Corporate debt securities17 60 
Total cash and cash equivalents14,308 16,601 
Marketable securities:
Marketable debt securities:
U.S. government securities9,303 10,901 
U.S. government agency securities5,049 5,927 
Corporate debt securities13,033 14,569 
Total marketable debt securities27,385 31,397 
Marketable equity securities83  
Total marketable securities27,468 31,397 
Restricted cash:
Restricted cash included in prepaid expenses and other current assets232 149 
Restricted cash included in other assets711 115 
Total restricted cash943 264 
Total cash, cash equivalents, marketable securities, and restricted cash$42,719 $48,262 

The following table summarizes our available-for-sale marketable debt securities and cash equivalents with unrealized losses as of September 30, 2022, aggregated by major security type and the length of time that individual securities have been in a continuous loss position (in millions):
September 30, 2022
Less than 12 months12 months or greaterTotal
Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
U.S. government securities$7,418 $(423)$1,793 $(119)$9,211 $(542)
U.S. government agency securities2,117 (82)2,934 (270)5,051 (352)
Corporate debt securities8,861 (653)3,869 (374)12,730 (1,027)
Total$18,396 $(1,158)$8,596 $(763)$26,992 $(1,921)

The gross unrealized gains on our marketable debt securities and cash equivalents were not material as of September 30, 2022 and December 31, 2021. The gross unrealized losses were $1.92 billion as of September 30, 2022, and not material as of December 31, 2021, respectively. The increase in the gross unrealized losses in the nine months ended September 30, 2022 is due to higher interest rates. The allowance for credit losses on our marketable debt securities was not material as of September 30, 2022 and December 31, 2021.

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The following table classifies our marketable debt securities by contractual maturities (in millions):
September 30, 2022
Due within one year$4,116 
Due after one year to five years23,269 
Total$27,385 

Note 5. Non-marketable Equity Securities

Our non-marketable equity securities are investments in privately-held companies without readily determinable fair values. The following table summarizes our non-marketable equity securities that were measured using measurement alternative and equity method (in millions):
September 30, 2022December 31, 2021
Non-marketable equity securities under measurement alternative:
Initial cost$6,388 $6,480 
Cumulative upward adjustments293 311 
Cumulative impairment/downward adjustments(186)(50)
Carrying value6,495 6,741 
Non-marketable equity securities under equity method33 34 
Total $6,528 $6,775 

As of September 30, 2022, we had $264 million of equity investment in Giphy. Due to regulatory restrictions, we do not control or exercise significant influence over Giphy. Based on a regulatory decision announced by the United Kingdom Competition and Markets Authority in October 2022, we plan to divest Giphy but we may not be able to recover our carrying value in connection with the divestiture.
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Note 6. Fair Value Measurements

The following table summarizes our assets measured at fair value on a recurring basis and the classification by level of input within the fair value hierarchy (in millions):
  Fair Value Measurement at Reporting Date Using
DescriptionSeptember 30, 2022Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Cash equivalents:
Money market funds$6,789 $6,789 $ $ 
U.S. government securities752 752   
U.S. government agency securities155 155   
Certificates of deposit and time deposits435  435  
Corporate debt securities17  17  
Marketable securities:
U.S. government securities9,303 9,303