Meta Reports Fourth Quarter and Full Year 2021 Results

Press: Ryan Moore

Forward-Looking Statements

This press release contains forward-looking statements regarding our future business plans and expectations. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: the impact of the COVID-19 pandemic on our business and financial results; our ability to retain or increase users and engagement levels; our reliance on advertising revenue; our dependency on data signals and 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, including our metaverse efforts; our emphasis on community growth and engagement and the user experience over short-term financial results; maintaining and enhancing our brand and reputation; our ongoing privacy, 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 October 26, 2021, 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 Annual Report on Form 10-K for the year ended December 31, 2021. In addition, please note that the date of this press release is February 2, 2022, 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 months and full year ended December 31, 2021 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; Principal payments on finance leases. We subtract both 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.

META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except for per share amounts)
(Unaudited)

	Three Months Ended December 31,	Twelve Months Ended December 31,
	2021	2020	2021	2020
Revenue	$ 33,671	$ 28,072	$ 117,929	$ 85,965
Costs and expenses:
Cost of revenue	6,348	5,210	22,649	16,692
Research and development	7,046	5,208	24,655	18,447
Marketing and sales	4,387	3,280	14,043	11,591
General and administrative	3,305	1,599	9,829	6,564
Total costs and expenses	21,086	15,297	71,176	53,294
Income from operations	12,585	12,775	46,753	32,671
Interest and other income, net	117	280	531	509
Income before provision for income taxes	12,702	13,055	47,284	33,180
Provision for income taxes	2,417	1,836	7,914	4,034
Net income	$ 10,285	$ 11,219	$ 39,370	$ 29,146
Earnings per share attributable to Class A and Class B
common stockholders:
Basic	$ 3.72	$ 3.94	$ 13.99	$ 10.22
Diluted	$ 3.67	$ 3.88	$ 13.77	$ 10.09
Weighted-average shares used to compute earnings per
share attributable to Class A and Class B common
stockholders:
Basic	2,765	2,850	2,815	2,851
Diluted	2,799	2,890	2,859	2,888
Share-based compensation expense included in costs and
expenses:
Cost of revenue	$ 149	$ 120	$ 577	$ 447
Research and development	1,882	1,361	7,106	4,918
Marketing and sales	206	175	837	691
General and administrative	169	128	644	480
Total share-based compensation expense	$ 2,406	$ 1,784	$ 9,164	$ 6,536

META PLATFORMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)

	December 31, 2021	December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$ 16,601	$ 17,576
Marketable securities	31,397	44,378
Accounts receivable, net	14,039	11,335
Prepaid expenses and other current assets	4,629	2,381
Total current assets	66,666	75,670
Equity investments	6,775	6,234
Property and equipment, net	57,809	45,633
Operating lease right-of-use assets	12,155	9,348
Intangible assets, net	634	623
Goodwill	19,197	19,050
Other assets	2,751	2,758
Total assets	$ 165,987	$ 159,316

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$ 4,083	$ 1,331
Partners payable	1,052	1,093
Operating lease liabilities, current	1,127	1,023
Accrued expenses and other current liabilities	14,312	11,152
Deferred revenue and deposits	561	382
Total current liabilities	21,135	14,981
Operating lease liabilities, non-current	12,746	9,631
Other liabilities	7,227	6,414
Total liabilities	41,108	31,026
Commitments and contingencies
Stockholders' equity:
Common stock and additional paid-in capital	55,811	50,018
Accumulated other comprehensive income (loss)	(693)	927
Retained earnings	69,761	77,345
Total stockholders' equity	124,879	128,290
Total liabilities and stockholders' equity	$ 165,987	$ 159,316

META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

	Three Months Ended December 31,	Twelve Months Ended December 31,
	2021	2020	2021	2020
Cash flows from operating activities
Net income	$ 10,285	$ 11,219	$ 39,370	$ 29,146
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization	2,014	1,863	7,967	6,862
Share-based compensation	2,406	1,784	9,164	6,536
Deferred income taxes	748	(377)	609	(1,192)
Other	34	62	(127)	118
Changes in assets and liabilities:
Accounts receivable	(2,038)	(3,059)	(3,110)	(1,512)
Prepaid expenses and other current assets	817	225	(1,750)	135
Other assets	(165)	(25)	(349)	(34)
Accounts payable	876	(56)	1,436	(17)
Partners payable	151	278	(12)	178
Accrued expenses and other current liabilities	2,462	2,218	3,357	(1,054)
Deferred revenue and deposits	100	(3)	187	108
Other liabilities	414	(89)	941	(527)
Net cash provided by operating activities	18,104	14,040	57,683	38,747
Cash flows from investing activities
Purchases of property and equipment	(5,370)	(4,613)	(18,567)	(15,115)
Purchases of marketable securities	(6,093)	(5,737)	(30,407)	(33,930)
Sales of marketable securities	16,340	2,008	31,671	11,787
Maturities of marketable securities	1,598	3,260	10,915	13,984
Purchases of equity investments	(2)	(59)	(47)	(6,361)
Acquisitions of businesses, net of cash acquired, and purchases of
intangible assets	(521)	(5)	(851)	(388)
Other investing activities	(123)	(27)	(284)	(36)
Net cash provided by (used in) investing activities	5,829	(5,173)	(7,570)	(30,059)
Cash flows from financing activities
Taxes paid related to net share settlement of equity awards	(1,507)	(1,121)	(5,515)	(3,564)
Repurchases of Class A common stock	(20,063)	(1,928)	(44,537)	(6,272)
Principal payments on finance leases	(172)	(205)	(677)	(604)
Net change in overdraft in cash pooling entities	—	48	14	24
Other financing activities	—	—	(13)	124
Net cash used in financing activities	(21,742)	(3,206)	(50,728)	(10,292)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(130)	314	(474)	279
Net increase (decrease) in cash, cash equivalents, and restricted cash	2,061	5,975	(1,089)	(1,325)
Cash, cash equivalents, and restricted cash at beginning of the period	14,804	11,979	17,954	19,279
Cash, cash equivalents, and restricted cash at end of the period	$ 16,865	$ 17,954	$ 16,865	$ 17,954

Reconciliation of cash, cash equivalents, and restricted cash to the condensed
consolidated balance sheets
Cash and cash equivalents	$ 16,601	$ 17,576	$ 16,601	$ 17,576
Restricted cash, included in prepaid expenses and other current assets	149	241	149	241
Restricted cash, included in other assets	115	137	115	137
Total cash, cash equivalents, and restricted cash	$ 16,865	$ 17,954	$ 16,865	$ 17,954

META PLATFORMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)

	Three Months Ended December 31,	Twelve Months Ended December 31,
	2021	2020	2021	2020
Supplemental cash flow data
Cash paid for income taxes, net	$ 606	$ 1,107	$ 8,525	$ 4,229
Non-cash investing and financing activities:
Property and equipment in accounts payable and accrued expenses
and other current liabilities	$ 3,404	$ 2,201	$ 3,404	$ 2,201
Acquisition of businesses in accrued expenses and other current
liabilities and other liabilities	$ 73	$ 118	$ 73	$ 118
Other current assets through financing arrangement in accrued expenses
and other current liabilities	$ 508	$ —	$ 508	$ —
Repurchases of Class A common stock in accrued expenses and other
current liabilities	$ 340	$ 68	$ 340	$ 68

Reconciliation of GAAP to Non-GAAP Results
(In millions, except percentages)
(Unaudited)

	Three Months Ended December 31,	Twelve Months Ended December 31,
	2021	2020	2021	2020
GAAP revenue	$ 33,671	$ 28,072	$ 117,929	$ 85,965
Foreign exchange effect on 2021 revenue using 2020 rates	307		(1,640)
Revenue excluding foreign exchange effect	$ 33,978		$ 116,289
GAAP revenue year-over-year change %	20%		37%
Revenue excluding foreign exchange effect year-over-year change %	21%		35%
GAAP advertising revenue	$ 32,639	$ 27,187	$ 114,934	$ 84,169
Foreign exchange effect on 2021 advertising revenue using 2020 rates	306		(1,620)
Advertising revenue excluding foreign exchange effect	$ 32,945		$ 113,314
GAAP advertising revenue year-over-year change %	20%		37%
Advertising revenue excluding foreign exchange effect year-over-year change %	21%		35%

Net cash provided by operating activities	$ 18,104	$ 14,040	$ 57,683	$ 38,747
Purchases of property and equipment	(5,370)	(4,613)	(18,567)	(15,115)
Principal payments on finance leases	(172)	(205)	(677)	(604)
Free cash flow ⁽¹⁾	$ 12,562	$ 9,222	$ 38,439	$ 23,028