Facebook Reports 2017 Q1 Earnings

Investment Analysis Clubs Saul’s Investing Discussions
1

Facebook stopped reporting non-GAAP numbers which annoys me, but whatcha gonna do? Shares are down about 3% in AH trading. Besides the ceasing of reporting non-GAAP numbers, it looks like just another ho-hum, boring quarter of near-50% revenue growth and 75% EPS growth. From CNBC:

Facebook smashed analysts’ earnings estimates in the first quarter of the year, shaking off “fake news” controversy and posting revenue that topped estimates.

The company added 80 million monthly users in the first few months of the year, as ad revenue popped 51 percent from a year ago.

But shares dipped in after-hours trade, as investors digested a new format for the company’s earnings report. Facebook said it is no longer reporting adjusted expenses, income, tax rate, and earnings per share (EPS) that are not in line with generally accepted accounting principles (non-GAAP).

“Given that stock is an important part of our compensation structure, we believe that investors should focus on our financial performance with stock-based compensation included,” chief financial officer David Wehner told analysts on a conference call on Wednesday.

Read the entire article at http://www.cnbc.com/2017/05/03/facebook-earnings-q1-2017.htm…

Here’s a look at the numbers:


Revenue (billions)	Q1		Q2		Q3		Q4
2013			1.458		1.813		2.016		2.585
2014			2.502		2.910		3.203		3.851
2015			3.543		4.042		4.501		5.841
2016			5.382		6.436		7.011		8.809
2017			8.032

EPS (non-GAAP)	        Q1		Q2		Q3		Q4
2013			0.12		0.19		0.27		0.32
2014			0.35		0.43		0.43		0.54
2015			0.42		0.50		0.57		0.79
2016			0.77		0.97		1.09		1.41

EPS (GAAP)		Q1		Q2		Q3		Q4
2014							0.30		0.25
2015			0.18		0.25		0.31		0.54
2016			0.60		0.71		0.82		1.21
2017			1.04

2017 Q1 Earnings (Current):

Revenue Growth (billions)
2016 Q1 TTM Revenue = 19.766
2017 Q1 TTM Revenue = 30.288
YOY TTM Revenue Growth =53.2%, previous quarter 54.2%

EPS Growth (GAAP)
2016 Q1 TTM Earnings = 1.70
2017 Q1 TTM Earnings = 3.78
YOY TTM GAAP EPS Growth =122%, previous quarter 155%
GAAP P/E (Check Current Price) = 152.78/3.78 = 40.4
GAAP 1YPEG = 40.4/122 = 0.33

Important note! Facebook ceased reporting non-GAAP EPS this quarter. Will leave the non-GAAP historical numbers up for a few quarters but will eventually leave it off my updates.

Here are some of the other quarter’s highlights:

DAUs (daily active users): 1.28B, +18% YOY
MAUs (monthly active users): 1.94B, +17% YOY
Cash and cash equivalents: $32.3B, previous quarter $29.45B, +9.6% sequentially
Cap Ex: $1.27B
Mobile advertising revenue: Made up 85% of all revenue, up from 82% of all revenue in 2016 Q1

Matt
Long FB
MasterCard (MA), Nestle (NSRGY), PayPal (PYPL), and Verizon (VZ) Ticker Guide
See all my holdings at http://my.fool.com/profile/CMFCochrane/info.aspx

13 Likes
2

Thank you Matt.

Looked like a solid quarter. EPS growth of 75%…I mean, wow! For a company this big, it is absolutely amazing!

I don’t understand why the stock is down AH.

Best,
Dominic

3

Looked like a solid quarter. EPS growth of 75%…I mean, wow! For a company this big, it is absolutely amazing! I don’t understand why the stock is down AH. - Dominic

Listening to several analysts after hours, they noted that Facebook cautioned that ad revenue growth will slow. Basic reason being there’s only so much advertising they can carry before they lose customer support. I suggest listening to the ER conference call or reading the transcript.

1 Like
4

Thanks, Matt. I slowly started taking notes tonight on their conference call. A long day at work today and again tomorrow. I’m exhausted now, so hopefully tomorrow night, well, I have to work late tomorrow night, so hopefully by Friday I can finish it up and get it posted.

Thanks again, Matt.

Fool on,

mazske

5

Whoops, I’m long FB and all of my holdings are listed in my profile.

Fool on,

mazske

6

Hi Matt.

“Facebook stopped reporting non-GAAP numbers which annoys me, but whatcha gonna do?”

I don’t cover Facebook (although I owns shares) so I don’t know how they’ve presented their data in the past. It’s a top-ten holding of mine so maybe I should be studying it myself. But if someone I respect is doing the work, I’ll do my heavy lifting on another stock. Hopefully, that will help someone else. Therefore, I eagerly study your coverage.

Often, when a company presents non-GAAP data, there’s a reconciliation of non-GAAP numbers to the closest GAAP equivalent. My suggestion would be to look at the past few earnings reports and study the reconciliations. If there are a lot of meaningful items in the reconciliation, and they are difficult to tease out of the GAAP presentation, then I’d probably just give up. If instead, the vast majority of the difference is stock-based comp, I bet you can find that in the 10-Q and 10-K. If you want to keep the non-GAAP table going, and stock-based comp is really the only material difference, why not just add back stock-based comp and call it good, with a footnote explaining the change in tactic and when it occurred?

Again, I haven’t looked at – let alone studied – FB’s GAAP to non-GAAP reconciliation. Maybe it’s trickier than I’m imagining. I just thought I’d try to give a semi-practical answer to what sounded to me like a rhetorical question.

Thanks as always, Matt, for what you do, and best wishes,
TMFDatabaseBob (long:FB)
See my holdings here: http://my.fool.com/profile/TMFDatabasebob/info.aspx
Peace on Earth

4 Likes