Facebook's Q3 2013 Report

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    Quarterly Earnings SlidesQ3 2013

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    Non-GAAP Measures

    In addition to U.S. GAAP financials, this presentation includes certain non-GAAP financial measures. Thesenon-GAAP measures are in addition to, not a substitute for or superior to, measures of financial performance

    prepared in accordance with U.S. GAAP. A reconciliation of non-GAAP financial measures to the corresponding

    GAAP measures is provided in the appendix to this presentation.

    2

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    124 126 129 130 132 135 139 142 144

    135 143 152 154160 169 179

    182 188

    98 105119 129

    141 153167 181

    189100

    109126

    139152 161

    180195

    208

    457483

    526552

    584618

    665699

    728

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

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    Daily Active Users (DAUs)

    DAUs / MAUs

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q313

    57% 57% 58% 58% 58% 59% 60% 61% 61%

    Rest of World

    Asia

    Europe

    US & Canada

    Please see Facebook's most recent Form 10-Q filed with the SEC for definitions of user activity used to determine the number of our DAUs, MAUs, and mobileMAUs. The number of DAUs, MAUs, and mobile MAUs do not include Instagram users unless they would otherwise qualify as such users, respectively, based ontheir other activities on Facebook.

    In Millions

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    176 179 183 186 189 193 195 198 199

    221 229 239 246 253261 269 272 276

    196 212234 255 277

    298 319339 351

    207225

    245268

    288304 327 346

    362

    800845 901

    955

    1,0071,056

    1,1101,155

    1,189

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

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    Monthly Active Users (MAUs)

    In MillionsRest of World

    Asia

    Europe

    US & Canada

    Please see Facebook's most recent Form 10-Q filed with the SEC for definitions of user activity used to determine the number of our DAUs, MAUs, and mobileMAUs. The number of DAUs, MAUs, and mobile MAUs do not include Instagram users unless they would otherwise qualify as such users, respectively, based ontheir other activities on Facebook.

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    Mobile Daily Active Users (Mobile DAUs)

    In Millions

    329

    374

    425

    469507

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Mobile DAUs are defined as users who accessed Facebook through our mobile apps or our mobile website during a given day. The number of mobile DAUsdo not include Instagram users unless they would otherwise qualify as such users based on their other activities on Facebook.

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    Mobile Monthly Active Users (Mobile MAUs)

    In Millions

    376432

    488543

    604

    680

    751

    819874

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Please see Facebook's most recent Form 10-Q filed with the SEC for definitions of user activity used to determine the number of our DAUs, MAUs, and mobileMAUs. The number of DAUs, MAUs, and mobile MAUs do not include Instagram users unless they would otherwise qualify as such users, respectively, based ontheir other activities on Facebook.

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    Mobile-Only Monthly Active Users (Mobile-Only MAUs)

    In Millions

    126

    157

    189219

    254

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Mobile-only MAUs are defined as users who accessed Facebook solely through mobile apps or our mobile website during a given month. The number ofmobile-only MAUs do not include Instagram users unless they would otherwise qualify as such users based on their other activities on Facebook.

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    $798$943 $872

    $992$1,086

    $1,329$1,245

    $1,599

    $1,798$156

    $188$186

    $192$176

    $256 $213

    $214

    $218

    $954

    $1,131$1,058

    $1,184$1,262

    $1,585

    $1,458

    $1,813$2,016

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Payments and other fees

    Advertising

    Revenue

    In Millions

    8

    *In the fourth quarter of 2012 we recognized revenue from four months of Payments transactions for accounting reasons detailed on pages 47 and 48 of ourForm 10-K filed on February 1, 2013.

    *

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    $482 $567 $525$590 $637

    $780$679

    $848$962

    $290

    $361$328

    $346$341

    $440

    $423

    $505

    $538

    $104

    $115$118

    $135$154

    $198

    $197

    $247

    $278

    $78

    $87$87

    $113$130

    $167

    $159

    $213

    $238

    $954

    $1,131$1,058

    $1,184$1,262

    $1,585

    $1,458

    $1,813$2,016

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Rest of World

    Asia

    Europe

    US & Canada

    9

    Revenue by User Geography

    Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform arevenue-generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financialstatements where revenue is geographically apportioned based on the location of the marketer or developer.

    In Millions

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    Rest of World

    Asia

    Europe

    US & Canada

    10

    Advertising Revenue by User Geography

    Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform arevenue-generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financialstatements where revenue is geographically apportioned based on the location of the marketer or developer.

    $395 $462 $419 $479$538

    $631 $552$721

    $832

    $245$306

    $274$294

    $295

    $374

    $367

    $451

    $482

    $88

    $95

    $99

    $115$133

    $168$176

    $225

    $255

    $71

    $79$79

    $104$120

    $156$150

    $202

    $229

    $798

    $943$872

    $992

    $1,086

    $1,329

    $1,245

    $1,599$1,798

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    In Millions

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    Rest of World

    Asia

    Europe

    US & Canada

    $87$105 $106 $111 $99

    $149$127 $127 $130

    $45

    $55 $54 $52

    $46

    $66

    $56 $54 $56

    $16

    $20 $19 $20

    $21

    $30

    $21 $22 $23

    $7

    $8 $8 $9

    $10

    $11

    $9 $11

    $9

    $156

    $188 $186 $192$176

    $256

    $213 $214 $218

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

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    Payments & Other Fees Revenue by User Geography

    Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they perform arevenue-generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financialstatements where revenue is geographically apportioned based on the location of the marketer or developer.

    *In the fourth quarter of 2012 we recognized revenue from four months of Payments transactions for accounting reasons detailed on pages 47and 48 of our Form 10-K filed on February 1, 2013.

    In Millions

    *

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    Average Revenue per User (ARPU)

    $1.18$1.46 $1.38

    $1.67 $1.76

    $0.18

    $0.26$0.21

    $0.20$0.20

    $1.37

    $1.71$1.60

    $1.87$1.96

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Europe

    $0.50$0.58 $0.57

    $0.68 $0.74

    $0.08

    $0.10 $0.07

    $0.07$0.07

    $0.58

    $0.69$0.64

    $0.75$0.81

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Asia

    Revenue by user geography is geographically apportioned based on our estimation of the geographic location of our users when they performa revenue-generating activity. This allocation differs from our revenue by geography disclosure in our condensed consolidated financial statements whererevenue is geographically apportioned based on the location of the marketer or developer. Please see Facebooks Form 10-Q for the quarter endedSeptember 30, 2013 for the definition of ARPU.

    *In the fourth quarter of 2012 we recognized revenue from four months of Payments transactions for accounting reasons detailed on pages 47 and 48 ofour Form 10-K filed on February 1, 2013.

    $0.43$0.53

    $0.48$0.60 $0.65

    $0.04

    $0.04$0.03

    $0.03$0.03

    $0.47

    $0.56

    $0.50

    $0.63$0.67

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Rest of World

    $1.11 $1.29 $1.15 $1.41

    $1.53

    $0.18

    $0.25

    $0.20

    $0.19$0.19

    $1.29

    $1.54

    $1.35

    $1.60$1.72

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Worldwide

    $2.87 $3.30 $2.85

    $3.67$4.19

    $0.53

    $0.78

    $0.65

    $0.65$0.65

    $3.40

    $4.08

    $3.50

    $4.32 $4.85

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    US & Canada

    Payments*

    Advertising

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    Share-Based Compensation Expense

    13

    $59 $74 $97$113 $138

    $137 $135$175 $193

    $986

    $28 $24 $9$17 $14

    $70 $76$103

    $1,106

    $179 $184 $170

    $224$239

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    In MillionsPre-2011 RSUs

    Post-2011 RSUs

    Options & Other

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    Expenses as a % of Revenue

    12% 10% 12% 13% 10%

    13% 12% 14% 15% 12%

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Marketing & Sales

    11% 10% 11% 10% 10%

    8% 9%9%

    9% 9%

    19% 19% 20% 19% 18%

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Research & Development

    10% 9% 10% 8% 7%

    12% 11% 12%10% 8%

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    General & Administrative

    Share-based compensation + Payroll tax related to share-based compensation All other expenses

    25% 24%28% 25% 25%

    26% 25%28%

    26% 25%

    Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Cost of Revenue

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    Income (Loss) from Operations

    $414$548

    $381

    ($743)

    $377$523

    $373$562

    $736

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    GAAP Income (Loss) from Operations (in millions)

    $484

    $624

    $485 $515 $525

    $736$563

    $794$987

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Non-GAAP Income from Operations (in millions)

    15

    Non-GAAP income (loss) from operations excludes share-based compensation expense, payroll tax expenses related to share-basedcompensation, and related income tax adjustmentssee the Appendix for a reconciliation of this non-GAAP measure to GAAP income (loss)from operations.

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    Operating Margin

    51% 55%46% 43% 42% 46% 39%

    44%49%

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Non-GAAP Operating Margin

    43% 48% 36%

    (63%)

    30% 33% 26% 31% 37%

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    GAAP Operating Margin

    Non-GAAP operating margin excludes share-based compensation expense, payroll tax expenses related to share-based compensation, andrelated income tax adjustmentssee the Appendix for a reconciliation of this non-GAAP measure to GAAP operating margin.

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    Effective Tax Rate

    Q312 through Q412 GAAP effective tax rates were influenced by significant share-based compensation expense resulting from our initial publicoffering, a portion of which is not tax-deductiblesee the Appendix for a reconciliation of this non-GAAP measure to GAAP effective tax rate.

    GAAP Effective Tax Rate

    Non-GAAP Effective Tax Rate

    Q2 Q3 Q4 Q1 Q2 FY FY

    ($ in millions) 2012 2012 2012 2013 2013 2011 2012

    GAAP (loss) income before provision for income taxes (765)$ 372$ 505$ 353 545 1,695 494GAAP (provision for) benefit from income taxes 608 (431) (441) (134) (212) (695) (441)

    Effective Tax Rate 79% 116% 87% 38% 39% 41% 89%

    Q2 Q3 Q4 Q1 Q2 FY FY

    ($ in millions) 2012 2012 2012 2013 2013 2011 2012

    Non-GAAP income before provision for income taxes 493 520 718 543 777 1,919 2,217Non-GAAP provision for income taxes 198 209 292 231 289 755 900

    Effective Tax Rate 40% 40% 41% 43% 37% 39% 41%

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    Net Income (Loss)

    $227 $302 $205

    ($157)($59)

    $64$219

    $333 $425

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Non-GAAP net income excludes share-based compensation expense, payroll tax expenses related to share-based compensation, and relatedincome tax adjustmentssee the Appendix for a reconciliation of this non-GAAP measure to GAAP net income.

    $273 $360 $287 $295 $311 $426 $312$488

    $621

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    GAAP Net Income (Loss) (in millions)

    Non-GAAP Net Income (in millions)

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    Diluted EPS

    $0.10$0.14

    $0.09

    ($0.08)

    ($0.02)

    $0.03

    $0.09$0.13

    $0.17

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    $0.12

    $0.15

    $0.12 $0.12 $0.12

    $0.17

    $0.12

    $0.19

    $0.25

    Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    GAAP Diluted EPS

    Non-GAAP Diluted EPS

    Non-GAAP diluted EPS excludes share-based compensation expense, payroll tax expenses related to share-based compensation, and relatedincome tax adjustmentssee the Appendix for a reconciliation of this non-GAAP measure to GAAP diluted EPS.

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    20

    Capital Investments

    In MillionsProperty and equipment acquired

    under capital leases

    Purchases of property

    and equipment

    $293

    $606

    $1,235

    $217

    $473

    $340

    $510

    $1,079

    $1,575

    2010 2011 2012

    Annual

    $1,037$879

    $251

    $11

    $1,288

    $890

    2012 2013

    YTD

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    Appendix

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    Effective Tax Rate (in millions) Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 FY2012

    GAAP income before provision for income taxes 372$ 505$ 353$ 545$ 726$ 494$

    GAAP provision for income taxes 431 441 134 212 301 441

    GAAP effective tax rate 116% 87% 38% 39% 41% 89%

    GAAP income before provision for income taxes 372$ 505$ 353$ 545$ 726$ 494$

    Share-based compensation and related payroll tax expenses 148 213 190 232 251 1,723

    Non-GAAP income before provision for income taxes 520$ 718$ 543$ 777$ 977$ 2,217$Non-GAAP provision for income taxes 209 292 231 289 356 900

    Non-GAAP effective tax rate 40% 41% 43% 37% 36% 41%

    23

    Reconciliations (continued)

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    Reconciliations (continued)

    Free Cash Flow (in millions) Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

    Net cash provided by operating activities 565$ 510$ 441$ 240$ 250$ 681$ 719$ 1,322$ 950$Purchases of property and equipment 136 185 453 413 171 198 327 268 284Property and equpiment acquired under capital leases 102 80 38 52 161 89 11 - -

    Free Cash Flow 327$ 245$ (50)$ (225)$ (82)$ 394$ 381$ 1,054$ 666$

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