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Facebook Beats But CFO Leaving

Tyler Durden's picture




 

Moments ago Facebook reported its GAAP and non-GAAP results (a very important distinction). Here is the Non-GAAP (i.e., we enjoy keeping our head in the sand) summary:

  • Q1 revenue $2.5 billion, beats expectations of $2.36 billion
  • Q1 revenue from advertising $2.27 billion
  • Q1 EPS $0.34, beat expectations of $0.24
  • Free cash flow - Free cash flow for the first quarter of 2014 was $922 million.
  • Capital expenditures - Capital expenditures for the first quarter of 2014 were $363 million.
  • Cash and marketable securities - Cash and marketable securities were $12.63 billion at the end of the first quarter of 2014.
  • Monthly active users (MAUs) were 1.28 billion as of March 31, 2014, an increase of 15% year-over-year. Unclear how many of these are bots originating out of Egypt and India.
  • Daily active users (DAUs) were 802 million on average for March 2014, an increase of 21% year-over-year.
  • Mobile DAUs were 609 million on average for March 2014, an increase of 43% year-over-year.
  • Mobile MAUs were 1.01 billion as of March 31, 2014, an increase of 34% year-over-year. 

The results in a nutshell:

 

Far more important than FB Non-GAAP results was the announcement that the CFO is leaving:

CFO Transition - Facebook today also announced that David Ebersman has informed the company of his intention to step down as chief financial officer after serving in the position for almost five years. On June 1, 2014, he will be succeeded as CFO by David Wehner, currently Facebook's Vice President, Corporate Finance and Business Planning. Ebersman will remain with the company through September to ensure a seamless transition of his responsibilities.

 

Wehner joined Facebook in November 2012 from Zynga, where he served as CFO. Earlier, he spent nine years at Allen & Company where he was a managing director. Wehner has a B.S. in Chemistry from Georgetown University, and an M.S. in Applied Physics from Stanford University.

 

"David has been a great partner in building Facebook, and I'm grateful for everything he's done to help make the world more open and connected," said Zuckerberg. "David set us up to operate efficiently and make the long term investments we need, and built an incredibly strong team including Dave Wehner, our next CFO. I look forward to working with Dave in his new role."

 

"This has been a tough decision because Facebook is such a great company and has such a bright future ahead, but I've decided to move back into healthcare where I spent my career before Facebook," Ebersman said. "It's been a privilege working at Facebook and being part of such a great team. We have an incredibly talented finance organization, and I have complete confidence in Dave Wehner and his ability to lead the team going forward."

One wonders what exactly it is that Ebersman may have "cooked up" to be promptly leaving the world's "greatest" social media stock. We will find out soon.

In the meantime, it is also worth pointing out the vast gap, pardon the pun, between Facebook GAAP and non-GAAP results:

  • GAAP Q1 Net Income: $642MM, Non-GAAP: $885MM
  • GAAP Q1 EPS: $0.34, Non-GAAP: $0.25
  • GAAP Q1 Operating Margin: 43%; Non-GAAP: 55%.

For now, the stock is very much confused what it wants to do on these "blowout" earnings.

 

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Wed, 04/23/2014 - 16:18 | 4687833 Colonel Klink
Colonel Klink's picture

Me thinks the book cooker is tired.

Wed, 04/23/2014 - 16:23 | 4687844 Rainman
Rainman's picture

The first rat off the ship is always the cooker....er fall guy

Thu, 04/24/2014 - 06:34 | 4689644 boogerbently
boogerbently's picture

Most companies price changes to match their earnings.

FB's earnings (miraculously) changed to match their price.

From a 1000+ PE to a more resonable ~100PE.

Wed, 04/23/2014 - 16:19 | 4687836 Al Huxley
Al Huxley's picture

I wouldn't worry.  Ebersman probably just wants to pursue other interests, or spend more time with his family. 

Wed, 04/23/2014 - 16:20 | 4687841 Sudden Debt
Sudden Debt's picture

Clearly the stock will now go to a PE of 6000 at least...

Wed, 04/23/2014 - 16:23 | 4687850 Colonel Klink
Colonel Klink's picture

At least it doesn't sound like they'll have to change David's star on the door.

Wed, 04/23/2014 - 16:29 | 4687851 khakuda
khakuda's picture

"David has been a great partner in building Facebook, and I'm grateful for everything he's done to help make the world more open and connected," said Zuckerberg.

An open and connected world where we can track your every move and the NSA and stalkers can see what you are up to by the minute, making Mark a very rich man.

Wed, 04/23/2014 - 16:25 | 4687856 Lendo
Lendo's picture

What a bullshit company trading at 200X per shares.  I can't wait to see this entire non-GAAP market crater.

Wed, 04/23/2014 - 16:38 | 4687897 Sudden Debt
Sudden Debt's picture

I'd love to see every stock that trades at 100 plus PE implode to 9 PE and watch on television how "investors" cry on screen on how they did not see this comming and why it's totally unfair that they crashed.

It would be the only sound signal that there's still hope for normal things to happen.
But than again... even at 9, it would probably be still way overvalued compaired to the real turnover.

In other news, about every industry in Europe seems te be grinding to a total halt this week.
Believe me, it's fucking weird what's happening. Total lockdown of orders in over 49 sectors at the same time.

Wed, 04/23/2014 - 16:29 | 4687865 qazwsx
qazwsx's picture

Is majority of revs just comming from Ad's? i cant fucking believe that they can make billions. Must be bots cliking like crazy on those things. 

Wed, 04/23/2014 - 19:44 | 4687919 Chuck Knoblauch
Chuck Knoblauch's picture

Revenues from government intelligence agencies and from money laundering activities.

Basically, US taxpayers are funding this POS company.

It's called wealth re-distribution.

Wed, 04/23/2014 - 16:30 | 4687871 The Axe
The Axe's picture

Why even keep a balance sheet..just make the shit up.....I do..

Wed, 04/23/2014 - 16:40 | 4687902 Sudden Debt
Sudden Debt's picture

It's the "no CEO left behind programm" where every company gets a profit label even if they're bankrupt. It's all about fairness...

Wed, 04/23/2014 - 17:06 | 4687872 Chuck Knoblauch
Chuck Knoblauch's picture

How much of the revenue is from the Government?

How much illegal cash is laundered through this company?

Wed, 04/23/2014 - 16:32 | 4687875 thismarketisrigged
thismarketisrigged's picture

its impossible not to beat expectations when they set the bar so god damn low,

 

its pathetic

Wed, 04/23/2014 - 16:40 | 4687904 nakki
nakki's picture

If I were writing a college paper (going back to clapper, snowden story) my hero would be zuckerberg. The fact that asshats still advertise on Facebook is truly ass-tonishing to me. 

Wed, 04/23/2014 - 16:55 | 4687935 conspicio
conspicio's picture

And the BATS Options Exchange IPO deal he did with Morgan Stanley will blow up in 3...2...1...?

Well, this certainly complicates Sandberg's departure plans as now there is no one to step in.

<queue up NIN "The Downward Spiral">

 

Wed, 04/23/2014 - 16:51 | 4687943 element115
element115's picture

Had dinner with my 16yo daughter and a couple of her friends the other night. I asked them what apps/sites they use the most, it was (in order) Snapchat, Instagram and Twitter. I asked if they still used Facebook and they all laughed. I asked the question louder so the patrons at our dining establishments (Chucks Steak and Seafood - Ko Olina) and a few heads turned.

Facebook is dead.

Wed, 04/23/2014 - 16:56 | 4687967 Babaloo
Babaloo's picture

The evidence right in front of your face says otherwise.  Feel free to disagree, as every other commenter here does, but that's just sheer ignorance at work.

Wed, 04/23/2014 - 17:09 | 4688013 Everybodys All ...
Everybodys All American's picture

Btw Instagram was bought by Facebook. Carry on and in no way do I advocate Facebook. Just pointing out a fact.

Wed, 04/23/2014 - 17:22 | 4688062 BeetleBailey
BeetleBailey's picture

Soooooo....FartLaDoucheBook banked some STUPID money, from STUPID COMPANIES, DUMB ENOUGH TO ADVERTISE ON THEIR SHIT SITE.

Or....how much Federal cash was secretly spent on this fraud of a fucked up web puke-site?

 

I bet billions....

FUCK FACEBOOK

Wed, 04/23/2014 - 17:31 | 4688107 Bernoulli
Bernoulli's picture

I read out of the slides:

- Q1'14 Revenue down 83 million USD from Q4'13 (weather-related?)

- Marketing and Sales and R&D (?) spending up

- Operating margin down 1%

- Purchases of property and equipment up by 36 million UDS quarter on quarter

and as for all the user data, read the "limitations of key metrics and other data" in the appendix, for example:

"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". 

or

"while user-provided data indicates a decline in usage among younger users, this age data is unreliable because a disproportionate number of our younger users register with an inaccurate age".

or

"The methodologies used to measure user metrics may also be susceptible to algorithm or other technical errors".

Inherent challenges... I see...

"lets get social"

 

Wed, 04/23/2014 - 17:45 | 4688161 Seize Mars
Seize Mars's picture

More lying in a world dominated by people whose business model is lying and stealing.

Wed, 04/23/2014 - 17:46 | 4688168 Notsobadwlad
Notsobadwlad's picture

So, if $2.27 of the $2.5 revenue is from advertising, would the bulk of the balance be data collection and spying fess paid to it by the US government spy agencies?

I am sure they would classify it as something else.

Wed, 04/23/2014 - 18:30 | 4688305 Flounder
Flounder's picture

If you want to know what I think you'll have to check my facebook page.

Wed, 04/23/2014 - 20:41 | 4688691 Downtoolong
Downtoolong's picture

It's tempting to get a Facebook account just so I can unfriend all the management.

Do NOT follow this link or you will be banned from the site!