Facebook Beats But CFO Leaving

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.