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The Most Ridiculous Charts From Facebook's Quarterly Earnings

Tyler Durden's picture




 

Facebook may still be able to fool most people most of the time, with gullible investors ready to believe that there were 1.393 billion monthly active addicts who just have to tell the world how their day went, of which 208 million were in the US and Canada, which is more than every single working-age American and Canadian, but where the magic of Facebook's just reported earnings of $0.54 can truly be appreciated, is in the absolutely magical breakdown between GAAP and non-GAAP for the net income microblogging service.

The punchline: Facebook reported $1,133 billion in GAAP earnings: exactly the same as a year ago. What happened to non-GAAP income from operations during the same period? It rose from $1.5 billion to $2.2 billion. Again: this is in a period in which GAAP income remained unchanged!

As for real, GAAP EPS, it was... drumroll... $0.25, or less than half of the mark-to-unicorn number that only FB shareholders, if not advertisers, can love.

Why does this matter? Because while Facebook can fool all the ostriches with their heads happily stuck in the sand, for as long as they all want, and pretend non-GAAP EPS is surging, what matters at the end of the day are profits. Real profits. GAAP profits.

The following:

 

So where did the adjustments, which amounted to $0.29 per share on GAAP EPS of $0.25 per share, come from? Well, everywhere...

... and to a great extent: tax gimmicks.

Source

 

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Wed, 01/28/2015 - 17:31 | 5717493 Tsar Pointless
Tsar Pointless's picture

FuckFacebook.

Wed, 01/28/2015 - 17:33 | 5717511 TruthInSunshine
TruthInSunshine's picture

I will only consider Non-GAAP income when BTFATH.

Wed, 01/28/2015 - 17:38 | 5717530 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

This article is way offbase.  Once Zuck's Rio Grande Rafters finish swarming the southern border then FaceBook will have 75 billion users...

 

 

 

...all with the same social security number

Wed, 01/28/2015 - 17:50 | 5717593 negative rates
negative rates's picture

Do you know how to click ads on.........Facebook?

Wed, 01/28/2015 - 18:09 | 5717664 B2u
B2u's picture

What ads?  I use Adblock and Adblock Plus.  I never see any ads.

Wed, 01/28/2015 - 19:15 | 5717891 CrazyCooter
CrazyCooter's picture

Yup. Karl over at the MarketTicker blocked all his traffic over AdBlock. He is reasonably savvy, so I presume it must work pretty good!

Also ...

Facebook reported $1,133 billion in GAAP earnings

I think I know what was intended here, but this is kind of misleading for us US folks who like our pounds, teaspoons, furlongs, gallons, and periods instead of commas.

Regards,

Cooter

Wed, 01/28/2015 - 19:13 | 5717897 CrazyCooter
CrazyCooter's picture

.

Wed, 01/28/2015 - 17:54 | 5717600 JungleCat
JungleCat's picture

All the more reason to speak in terms of PROFITS per share rather than this EPS EBITDA charade.

BTW: good catch.

Wed, 01/28/2015 - 17:52 | 5717601 Ignatius
Ignatius's picture

Here's NSA whistleblower and former Technical Director, William Binney, in an extensive interview where he says the FB is a security state dream:

https://www.youtube.com/watch?v=3owk7vEEOvs

Wed, 01/28/2015 - 18:34 | 5717733 WillyGroper
WillyGroper's picture

thx

Wed, 01/28/2015 - 21:37 | 5718424 Ignatius
Ignatius's picture

Binney 2016

Wed, 01/28/2015 - 17:45 | 5717573 Bossman1967
Bossman1967's picture

Facebook equals people you wanted to forget about in your life find you and try to ruin the rest of your life. I do not have a need to share what my last shit looked like and at 47 yrs old I am capable of communicating with people by using my speech. how and why Facebook even exist is the 8 th wonder of this messed up world

Wed, 01/28/2015 - 18:45 | 5717767 Bro of the Sorr...
Bro of the Sorrowful Figure's picture

i deleted mine two years ago, but as a 20 something i can assure you that most guys spend their time on facebook "creeping" on girls, ie looking at and in some instances masturbiznating to girls' pictures. and most girls spend their time on facebook trying to outdo the other girls, more slutty pictures, more stupid posts, more nonsense. it's a perpetual shitstorm of hormones and general retardation.

Wed, 01/28/2015 - 19:10 | 5717890 Citxmech
Citxmech's picture

"Masturbiznating?"

=]

Wed, 01/28/2015 - 19:15 | 5717912 Bro of the Sorr...
Bro of the Sorrowful Figure's picture

masturbiznate, v. to take care of one's bizness

Wed, 01/28/2015 - 18:09 | 5717659 B2u
B2u's picture

FuckFacebook?  I'd rather fuck Heidi Klum.

Wed, 01/28/2015 - 17:36 | 5717519 Karlus
Karlus's picture

Tesla does the same thing. Why use GAAP when Non-GAAP makes profit look so much better. GAAP accounting is for my Dad, this is the New Math

Wed, 01/28/2015 - 17:41 | 5717555 bshirley1968
bshirley1968's picture

Then your dad must have lived when 2+2=4.  During a time when rules and laws mattered.  Unlike the New Math and New Age where we, I mean "they", get to make it us as they go.

Facebook is a joke.......and always has been.

Wed, 01/28/2015 - 18:20 | 5717687 Pig Circus
Pig Circus's picture

Had they reported last night the stock would be up 10. Last night thanks to AAPL new math didn't matter. After today's sell-off the Junkie's are Jonesing.

Wed, 01/28/2015 - 17:41 | 5717556 nuubee
nuubee's picture

I'm sure you'll get tons of likes with that attitude.

Wed, 01/28/2015 - 17:50 | 5717591 Karlus
Karlus's picture

Sarcasm?!

Wed, 01/28/2015 - 17:36 | 5717524 Skateboarder
Skateboarder's picture

When the negation of something becomes that something, then the something becomes what the negation used to be. That is to say, if non-GAAP is the new norm, then it is GAAP, and non-GAAP is what GAAP used to be.

Wed, 01/28/2015 - 17:40 | 5717538 Concentrated po...
Concentrated power has always been the enemy of liberty.'s picture

No habla Englise

Wed, 01/28/2015 - 17:40 | 5717544 LawsofPhysics
LawsofPhysics's picture

< head explodes...>

 

When fraud isthe status quo, possession is 100% of the law.

that is all.

Wed, 01/28/2015 - 17:44 | 5717567 max2205
max2205's picture

And IBB IS CERTAINLY WORTH A 997 PE..?.. right?

Wed, 01/28/2015 - 17:41 | 5717548 Karlus
Karlus's picture

Ahh sooo....I see you are a master debater and holder of the word juijitsu

Wed, 01/28/2015 - 17:38 | 5717533 Moe Hamhead
Moe Hamhead's picture

Ah, what's a facebook anyway?  Never used it -- never will!  Next!

Wed, 01/28/2015 - 17:40 | 5717539 CunnyFunt
CunnyFunt's picture

GAAP or non-GAAP, FB is still a piece of shit.

Wed, 01/28/2015 - 18:31 | 5717721 Sokhmate
Sokhmate's picture

Hence, fEcebook

Wed, 01/28/2015 - 17:40 | 5717545 adr
adr's picture

I guess Zuckerberg counts every fake account as $2 in income.

Out of all the people on Earth, Zuckerberg is the one I want to hit in the face the most. He just needs to have his giant nose broken. Then I can laugh my ass off as he cries like a little girl and runs off.

Although the rage I would put through my fist would probably kill him on inpact.

Wed, 01/28/2015 - 17:40 | 5717554 Karlus
Karlus's picture

I propose a cage match between Tim Cook and MarkZ

Flawless Victory

Wed, 01/28/2015 - 18:56 | 5717815 Dadburnitpa
Dadburnitpa's picture

SpongeBob v. Mr. Burns.

Wed, 01/28/2015 - 17:50 | 5717590 NotApplicable
NotApplicable's picture

I wonder if they count the accounts that they make for people who appear in users photos/posts?

Wed, 01/28/2015 - 17:44 | 5717569 Yen Cross
Yen Cross's picture

 What about Linkedin ~?   No Farceplant is complete, without some Linkedin?

Wed, 01/28/2015 - 17:51 | 5717595 Bernanke'sDaddy
Bernanke&#039;sDaddy's picture

Don't get me started....people work backbreaking jobs for shit wages while some asshole PR bitch at Linkedin walks away with millions in stock options...

 

What a fucking sham that company is. I live a few minutes from their HQ.

Wed, 01/28/2015 - 18:03 | 5717643 Billy Sol Estes
Billy Sol Estes's picture

FaceLinkedBookIn

Same shit, different label.

Wed, 01/28/2015 - 18:32 | 5717726 Sokhmate
Sokhmate's picture

I suggest FeceLinks. Think about the imagery.

Wed, 01/28/2015 - 18:50 | 5717777 Yen Cross
Yen Cross's picture

 Actually, you're on to something.  ‰  hOVERBOARDS.

Wed, 01/28/2015 - 17:58 | 5717625 Evil Bugeyes
Evil Bugeyes's picture

It is hard to justify a 70+ P/E when earnings are stagnating/declining.

What we have here is a GAAP in management honesty. They don't want anyone to know that we have reached peak FB.

Wed, 01/28/2015 - 18:13 | 5717674 Aunty Christ
Aunty Christ's picture

Ok, let's suspend our disbelief for a second and believe FB indeed has 1.4B active users. There are roughly 7 B people on this earth, most of whom don't have a computer/cel phone etc , let alone reliable internet access ( think vast swaths of Africa/M.E/ Asia). So what FB is saying is that everybody who has internet access is an active FB user? I hit the bullshit buzzer on that. And where's the growth going to come from if you have already saturated your market???

Wed, 01/28/2015 - 18:34 | 5717735 nufio
nufio's picture

also FB is banned in china leaving only 5.5B potential users

Wed, 01/28/2015 - 19:17 | 5717923 CrazyCooter
CrazyCooter's picture

Why don't they just report 12B users with expectations of 15% growth for the next seven years and be done with it.

Regards,

Cooter

Wed, 01/28/2015 - 18:18 | 5717684 Coldfire
Coldfire's picture

Facebook is the CB radio of our time. (Look it up, kids).

Wed, 01/28/2015 - 18:52 | 5717788 Yen Cross
Yen Cross's picture

  bACK TO BASICS?

  Who's seen an optical (audio) outlet on the back of their TV?

Wed, 01/28/2015 - 19:14 | 5717908 Ward cleaver
Ward cleaver's picture

Let them clickers thru 10:4. We gotta great big
shit stock rolling thru the night, yeah we gotta great
big shit stock ain't it a beautiful sight

Wed, 01/28/2015 - 18:22 | 5717689 buzzsaw99
buzzsaw99's picture

Kudos to CFO David M. Wehner. Well played sir!

#WEHNNING!

Wed, 01/28/2015 - 18:26 | 5717705 Toxx
Toxx's picture

For a second there, I thought FB netted some new government contracts and pulled in over a trillion in revenue.

Wed, 01/28/2015 - 18:31 | 5717723 lasvegaspersona
lasvegaspersona's picture

FOOLS!!! GAAP is for little unimportant people. Companies that are systemically important or providing the NSA with critical, even unlawful information on little, unimportant people don't even think in GAAP. They use GET! (get it?) 

If you did not know this or can't understand then stop asking because you are little and unimportant. Just pay your taxes and thank BO that you still have a country over which the shadow of recession has passed. These are complicated calculations and required knowing the numbers that are NEEDED and not the numbers that you seem to find when you apply your 20th century mind to 21st century problems.

Sorry if I sound dismissive but get the fuck out of their way.

Wed, 01/28/2015 - 18:33 | 5717731 Bennie Noakes
Bennie Noakes's picture

From the statement, FB paid out nearly $900 million in "share based compensation" during the quarter. This accounts for a big part of the difference. So FB is making money, but a huge chunk of it is going to management and using non-GAAP earnings allows them to hide this fact.

Wed, 01/28/2015 - 18:36 | 5717739 schadenfreude
schadenfreude's picture

It's really amazing. 15 years ago it was profit (after interests und taxes). Then it was EBIT. Then it was EBITA. Then EBITDA. Then they switsched to EPS, because of stock buy backs. And the last couple of years it is adjusted GAAP income and Non-GAAP income.....what's next?

Wed, 01/28/2015 - 18:38 | 5717755 lasvegaspersona
lasvegaspersona's picture

Schade..it will be what it has been for a good while...exactly what they need it to be....try to keep up..

Wed, 01/28/2015 - 19:39 | 5718018 schadenfreude
schadenfreude's picture

When gross margin = profit and the cost of employees got adjusted we are finally there.

Wed, 01/28/2015 - 19:10 | 5717883 jomama
Wed, 01/28/2015 - 19:58 | 5718088 mattgallis
mattgallis's picture

Most of what you are writing about is actual GAAP measures, just different metrics.  Adjusted GAAP is intended to show pro-forma results from one-time instances or a big non-cash charge in a specific quarter so analysts can quickly compare quarter over quarter.

 

What FB is doing is trying to hide the fact they've made several big aquisition in excess of fair value and they have to amortize as an expense.  The non-GAAP earnings hide a seriously bad transaction, that's why they do it.

Wed, 01/28/2015 - 20:12 | 5718153 JamaicaJim
JamaicaJim's picture

We GAAPED some folks...and gathered every single little piece of shit information on them like a hoarder on crack.

Zuckerfuck sold his lousy soul to Satan. Fuck him and dragon he rode in on.

Wed, 01/28/2015 - 18:36 | 5717748 lasvegaspersona
lasvegaspersona's picture

Is Facebook like My space..that was BIG!!

...then it got uncool and poof, like a fart in a huricane, like a puff of smoke in a cloud, like a grain of sand in your undies after a day at the beach, like a singly synapse in Einsteins brain, like a drop of pink slime in the totality of the fat stored from McBurgers burgers...I could go on but I get paid in real terms, if I was allowed nonGAAP...then I'd try harder...

Wed, 01/28/2015 - 20:33 | 5718237 Chris88
Chris88's picture

While Facebook is an overpriced, useless piece of crap that won't exist in five years, ZH's obsessions with non-GAAP earnings is truly idiotic.  There are plenty of GAAP accounting standards that are completely and utterly useless.  Somebody tell me what's wrong with the adjustments FB made above?  Really, tell me.  I'm an equity analyst who covers financial services; with the exception of banks, GAAP is almost entirely useless for financials.  Please, ZeroHedge, stop the bullshit posts like this.  

Wed, 01/28/2015 - 21:04 | 5718325 MeelionDollerBogus
MeelionDollerBogus's picture

please explain why that is. Specific examples would be great.

Wed, 01/28/2015 - 22:12 | 5718529 Chris88
Chris88's picture

Equity REITs: you think AFFO/FFO are BS but GAAP isn't?  A company that adds value to a property and consistently puts capex into making this the case has to take huge depreciation against the property, among a myriad of other things that also make no sense.  BDCs:  Net investment income is used instead of GAAP becasue fair value marks on level 3 assets don't mean shit in terms of the earnings power the company is generating; they're merely third party marks.  If an investment in the portfolio isn't perfomring, that's already reflecting in decreasing investment income yet it gets marked in GAAP.  Mortgage servicers:  again, marking MSRs based on Monte Carloi simulations, I've seen MSRs get marked down because falling rates would increase prepayments in theory, even when that quarter CPR slowed, so that is commonly backed out.  You want 5 more examples, or are you starting to realize that ZH is becoming a pandering bunch of crap?  No wonder so many leftists and sociology majors are flocking here, it's becoming a joke.

Thu, 01/29/2015 - 04:57 | 5719087 MeelionDollerBogus
MeelionDollerBogus's picture

ZH can't be the ultimate wisdom of the universe without contribution. You should write a whole article clearing this up.

That's how ZH got good in fhe first place.

Wed, 01/28/2015 - 22:20 | 5718547 Chris88
Chris88's picture

Oh wait I forgot a real laugher.  The GAAP accounting on CLOs, an asset that experienced nearly no losses through the crisis.  So because of volatility picking up spreads have widened, CLO equity marks under GAAP have been huge.  There has been no impairments of cash flow to the residual interest component.  In volatility, CLO managers love it because they reinvest at higher spreads even though the debt the CLO is funded with won't reprice, thus the excess cash flow going to the residual interest becomes outsized.  Literally the returns get better and the fair value marks get worse.  Another BS GAAP rule that makes no practical sense.  Anybody that understands these businesses knows GAAP has so much bullshit it's unreal.

Thu, 01/29/2015 - 09:42 | 5719351 mastersnark
mastersnark's picture

I must have missed the part where FB became a financial services company thereby making your criticism on point.

Wed, 01/28/2015 - 21:02 | 5718280 kchrisc
kchrisc's picture

Facebook uses the the accounting firm of Winston, and Smith.

Their motto is: Picking up where Arthur Andersen left off.

The banksters need to repay us.

Wed, 01/28/2015 - 21:03 | 5718298 kchrisc
kchrisc's picture

Here's a likely nightmare for people to consider: I predict that it is only a matter of time before the IRS starts taxing businesses, the less than gigantic ones, on non-GAAP income. And they'll do it retroactively, saying your business owes for the past 7 years.

You heard it here first.

The banksters need to repay us.

 

I seem to remember that in the early 90s the IRS arbitrarily decided to not allow some tax shelters that they had been allowing for years. Levied back theft, augmented theft, and usury, for the prior 7 years. Bankrupted many folks, especially a lot of dentists.

Wed, 01/28/2015 - 21:04 | 5718322 MeelionDollerBogus
MeelionDollerBogus's picture

GAAP, non-GAAP

used to be keeping 2 sets of books was the sure sign of racketeering! Nowadays it's normal business. How'd that happen?

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