Company Update (NASDAQ:FB): Facebook Inc Reports 2Q:15 Results


Facebook, Inc. (NASDAQ:FB) reported financial results for the quarter ended June 30, 2015.

“This was another strong quarter for our community,” said Mark Zuckerberg, Facebook founder and CEO. “Engagement across our family of apps keeps growing, and we remain focused on improving the quality of our services.”

Second Quarter 2015 Financial Summary 
Three Months EndedJune 30, Six Months EndedJune 30,
In millions, except percentages and per share amounts 2015 2014 2015 2014
Revenue $ 4,042 $ 2,910 $ 7,586 $ 5,412
Income from Operations
   GAAP $ 1,273 $ 1,390 $ 2,206 $ 2,464
   Non-GAAP* $ 2,228 $ 1,753 $ 4,068 $ 3,167
Operating Margin
   GAAP 31% 48% 29% 46%
   Non-GAAP* 55% 60% 54% 59%
Net Income
   GAAP $ 719 $ 791 $ 1,231 $ 1,433
   Non-GAAP* $ 1,437 $ 1,122 $ 2,626 $ 2,047
Diluted Earnings per Share (EPS)
   GAAP $ 0.25 $ 0.30 $ 0.43 $ 0.55
   Non-GAAP* $ 0.50 $ 0.43 $ 0.92 $ 0.79
* Non-GAAP financial measures exclude amortization of intangible assets, share-based compensation and related payroll tax expenses. Non-GAAP net income and EPS also exclude the income tax effects of these non-GAAP adjustments. Non-GAAP information for the three and six months ended June 30, 2014 has been updated to exclude amortization of intangible assets to conform to our current period presentation. See the table below titled “Reconciliation of Non-GAAP Results to Nearest GAAP Measures.”

Second Quarter 2015 Operational Highlights

  • Daily active users (DAUs) – DAUs were 968 million on average for June 2015, an increase of 17% year-over-year.
  • Mobile DAUs – Mobile DAUs were 844 million on average for June 2015, an increase of 29% year-over-year.
  • Monthly active users (MAUs) – MAUs were 1.49 billion as of June 30, 2015, an increase of 13% year-over-year.
  • Mobile MAUs – Mobile MAUs were 1.31 billion as of June 30, 2015, an increase of 23% year-over-year.

 

Second Quarter 2015 Financial Highlights
GAAP Year-over-Year % Change
Three Months Ended June 30,
In millions, except percentages and per share amounts 2015 2014
Revenue:
   Advertising(1) $ 3,827 $ 2,676 43%
   Payments and other fees 215 234 (8)%
Total revenue(2) 4,042 2,910 39%
Total costs and expenses 2,769 1,520 82%
Income from operations $ 1,273 $ 1,390 (8)%
Operating margin 31% 48%
Provision for income taxes 554
Effective tax rate 44%
Net income $ 719 $ 791 (9)%
Diluted EPS $ 0.25 $ 0.30 (17)%
(1)    Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased by 55%.
(2)   Excluding the impact of year-over-year changes in foreign exchange rates, total revenue would have increased by 50%.

 

NON-GAAP Year-over-Year % Change
Three Months Ended June 30,
In millions, except percentages and per share amounts 2015 2014
GAAP revenue $ 4,042 $ 2,910 39%
Total costs and expenses 1,814 1,157 57%
Income from operations $ 2,228 $ 1,753 27%
Operating margin 55% 60%
Effective tax rate 36%
Net income $ 1,437 $ 1,122 28%
Diluted EPS $ 0.50 $ 0.43 16%

Second Quarter 2015 Other Financial Highlights

  • Mobile advertising revenue – Mobile advertising revenue represented approximately 76% of advertising revenue for the second quarter of 2015, up from approximately 62% of advertising revenue in the second quarter of 2014.
  • Capital expenditures – Capital expenditures for the second quarter of 2015 were $549 million.
  • Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $14.13 billion at the end of the second quarter of 2015.
  • Free cash flow – Free cash flow for the second quarter of 2015 was $1.33 billion. (Original Source)

In reaction to the earnings release, shares of Facebook are down 2.14% to $93.25 in after-hours trading. FB has a 1-year high of $99.24 and a 1-year low of $70.32. The stock’s 50-day moving average is $88.09 and its 200-day moving average is $81.74.

On the ratings front, Facebook has been the subject of a number of recent research reports. In a report released yesterday, Axiom analyst Victor Anthony maintained a Buy rating on FB, with a price target of $117, which represents a potential upside of 21.5% from where the stock is currently trading. Separately, on the same day, Standard & Poor’s’ Scott Kessler maintained a Buy rating on the stock .

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Victor Anthony and Scott Kessler have a total average return of 15.3% and 17.2% respectively. Anthony has a success rate of 64.3% and is ranked #112 out of 3718 analysts, while Kessler has a success rate of 71.6% and is ranked #146.

Overall, 3 research analysts have assigned a Hold rating and 33 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $94.35 which is -2.0% under where the stock opened today.