FACEBOOK INC, 10-Q filed on 7/24/2014
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 30, 2014
Jul. 22, 2014
Class A Common Stock
Jul. 22, 2014
Class B Common Stock
Document Information
 
 
 
Document Type
10-Q 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Jun. 30, 2014 
 
 
Document Fiscal Year Focus
2014 
 
 
Document Fiscal Period Focus
Q2 
 
 
Trading Symbol
FB 
 
 
Entity Registrant Name
FACEBOOK INC 
 
 
Entity Central Index Key
0001326801 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
2,015,048,077 
585,003,514 
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Current assets:
 
 
Cash and cash equivalents
$ 4,384 
$ 3,323 
Marketable securities
9,572 
8,126 
Accounts receivable, net of allowances for doubtful accounts of $33 and $38 as of June 30, 2014 and December 31, 2013, respectively
1,190 
1,109 
Prepaid expenses and other current assets
411 
512 
Total current assets
15,557 
13,070 
Property and equipment, net
3,334 
2,882 
Goodwill and intangible assets, net
1,672 
1,722 
Other assets
206 
221 
Total assets
20,769 
17,895 
Current liabilities:
 
 
Accounts payable
146 
87 
Developer partners payable
176 
181 
Accrued expenses and other current liabilities
666 
555 
Deferred revenue and deposits
53 
38 
Current portion of capital lease obligations
173 
239 
Total current liabilities
1,214 
1,100 
Capital lease obligations, less current portion
153 
237 
Other liabilities
1,056 
1,088 
Total liabilities
2,423 
2,425 
Stockholders' equity:
 
 
Common stock, $0.000006 par value; 5,000 million Class A shares authorized, 2,013 million and 1,970 million shares issued and outstanding, including 5 million and 6 million outstanding shares subject to repurchase, as of June 30, 2014 and December 31, 2013, respectively; 4,141 million Class B shares authorized, 562 million and 577 million shares issued and outstanding, including 5 million and 6 million outstanding shares subject to repurchase, as of June 30, 2014 and December 31, 2013, respectively
0 
0 
Additional paid-in capital
13,759 
12,297 
Accumulated other comprehensive (loss) income
(5)
14 
Retained earnings
4,592 
3,159 
Total stockholders' equity
18,346 
15,470 
Total liabilities and stockholders' equity
$ 20,769 
$ 17,895 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Current assets:
 
 
Accounts receivable, allowances for doubtful accounts
$ 33 
$ 38 
Stockholders' equity:
 
 
Common stock, par value (in dollars per share)
$ 0.000006 
$ 0.000006 
Class A Common Stock
 
 
Stockholders' equity:
 
 
Common stock, shares authorized
5,000,000,000 
5,000,000,000 
Common stock, shares issued
2,013,000,000 
1,970,000,000 
Common stock, shares outstanding
2,013,000,000 
1,970,000,000 
Common stock, outstanding shares subject to repurchase
5,000,000 
6,000,000 
Class B Common Stock
 
 
Stockholders' equity:
 
 
Common stock, shares authorized
4,141,000,000 
4,141,000,000 
Common stock, shares issued
562,000,000 
577,000,000 
Common stock, shares outstanding
562,000,000 
577,000,000 
Common stock, outstanding shares subject to repurchase
5,000,000 
6,000,000 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Revenue
$ 2,910 
$ 1,813 
$ 5,412 
$ 3,271 
Costs and expenses:
 
 
 
 
Cost of revenue
473 
465 
936 
878 
Research and development
492 
344 
947 
637 
Marketing and sales
358 
269 
681 
472 
General and administrative
197 
173 
384 
349 
Total costs and expenses
1,520 
1,251 
2,948 
2,336 
Income from operations
1,390 
562 
2,464 
935 
Interest and other income/(expense), net
(4)
(17)
(4)
(37)
Income before provision for income taxes
1,386 
545 
2,460 
898 
Provision for income taxes
595 
212 
1,027 
346 
Net income
791 
333 
1,433 
552 
Less: Net income attributable to participating securities
3 
2 
6 
3 
Net income attributable to Class A and Class B common stockholders
788 
331 
1,427 
549 
Earnings per share attributable to Class A and Class B common stockholders:
 
 
 
 
Basic (in dollars per share)
$ 0.31 
$ 0.14 
$ 0.56 
$ 0.23 
Diluted (in dollars per share)
$ 0.30 
$ 0.13 
$ 0.55 
$ 0.22 
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders:
 
 
 
 
Basic (in shares)
2,560 
2,407 
2,552 
2,397 
Diluted (in shares)
2,615 
2,502 
2,609 
2,499 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
314 
224 
588 
394 
Cost of revenue
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
16 
11 
28 
19 
Research and development
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
219 
151 
400 
268 
Marketing and sales
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
50 
33 
93 
57 
General and administrative
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
$ 29 
$ 29 
$ 67 
$ 50 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 791 
$ 333 
$ 1,433 
$ 552 
Other comprehensive income (loss):
 
 
 
 
Change in foreign currency translation adjustment
(20)
(13)
(21)
(31)
Change in unrealized gain/loss on available-for-sale investments, net of tax
0 
(3)
2 
(3)
Change in unrealized gain/loss on derivative, net of tax
0 
2 
0 
3 
Comprehensive income
$ 771 
$ 319 
$ 1,414 
$ 521 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Cash flows from operating activities
 
 
Net income
$ 1,433 
$ 552 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
521 
463 
Lease abandonment
(26)
65 
Share-based compensation
588 
394 
Deferred income taxes
(34)
19 
Tax benefit from share-based award activity
875 
148 
Excess tax benefit from share-based award activity
(883)
(155)
Other
3 
20 
Changes in assets and liabilities:
 
 
Accounts receivable
(82)
(62)
Prepaid expenses and other current assets
10 
428 
Other assets
18 
(44)
Accounts payable
69 
2 
Developer partners payable
(5)
3 
Accrued expenses and other current liabilities
75 
9 
Deferred revenue and deposits
15 
2 
Other liabilities
49 
197 
Net cash provided by operating activities
2,626 
2,041 
Cash flows from investing activities
 
 
Purchases of property and equipment
(832)
(595)
Purchases of marketable securities
(4,482)
(3,460)
Sales of marketable securities
1,968 
1,275 
Maturities of marketable securities
1,074 
2,174 
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets
(19)
(221)
Other investing activities, net
(3)
3 
Net cash used in investing activities
(2,294)
(824)
Cash flows from financing activities
 
 
Taxes paid related to net share settlement of equity awards
(3)
(558)
Proceeds from exercise of stock options
2 
10 
Principal payments on capital lease obligations
(150)
(200)
Excess tax benefit from share-based award activity
883 
155 
Net cash provided by (used in) financing activities
732 
(593)
Effect of exchange rate changes on cash and cash equivalents
(3)
(7)
Net increase in cash and cash equivalents
1,061 
617 
Cash and cash equivalents at beginning of period
3,323 
2,384 
Cash and cash equivalents at end of period
4,384 
3,001 
Cash paid during the period for:
 
 
Interest
8 
26 
Income taxes
61 
18 
Cash received during the period for:
 
 
Income taxes
2 
419 
Non-cash investing and financing activities:
 
 
Fair value of shares issued related to acquisitions of businesses
0 
77 
Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions
 
 
Non-cash investing and financing activities:
 
 
Property and equipment expenditures incurred but not yet paid
18 
(5)
Property and equipment acquired under capital leases
 
 
Non-cash investing and financing activities:
 
 
Property and equipment expenditures incurred but not yet paid
$ 0 
$ 11 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
The condensed consolidated balance sheet as of December 31, 2013 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.
The condensed consolidated financial statements include the accounts of Facebook, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
The accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2014.
There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 that have had a material impact on our condensed consolidated financial statements and related notes.
Use of Estimates
Conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, collectability of accounts receivable, contingent liabilities, fair value of financial instruments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, and income taxes. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.
Recent Accounting Pronouncements
 In May 2014, the Financial Accounting Standards Board issued guidance related to revenue from contracts with customers. Under this guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The updated standard will replace most existing revenue recognition guidance under GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard will be effective for us in the first quarter of 2017. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.
Earnings per Share
Earnings per Share
Earnings per Share
We compute earnings per share (EPS) of Class A and Class B common stock using the two-class method required for participating securities. We consider restricted stock awards to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares.
Undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders. Basic EPS is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of our Class A and Class B common stock outstanding, adjusted for outstanding shares that are subject to repurchase.
For the calculation of diluted EPS, net income attributable to common stockholders for basic EPS is adjusted by the effect of dilutive securities, including awards under our equity compensation plans. In addition, the computation of the diluted EPS of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted EPS of Class B common stock does not assume the conversion of those shares to Class A common stock. Diluted EPS attributable to common stockholders is computed by dividing the resulting net income attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding.
We have excluded 18 million and 10 million restricted stock units (RSUs) from the EPS calculation for the three and six months ended June 30, 2014, respectively, and 50 million and 23 million RSUs for the three and six months ended June 30, 2013, respectively, because the impact would be anti-dilutive.
Basic and diluted EPS are the same for each class of common stock because they are entitled to the same liquidation and dividend rights.
The numerators and denominators of the basic and diluted EPS computations for our common stock were calculated as follows (in millions, except per share amounts): 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
617

 
$
174

 
$
245

 
$
88

 
$
1,116

 
$
317

 
$
400

 
$
152

Less: Net income attributable to participating securities
2

 
1

 
2

 
—

 
5

 
1

 
2

 
1

Net income attributable to common stockholders
$
615

 
$
173

 
$
243

 
$
88

 
$
1,111

 
$
316

 
$
398

 
$
151

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
2,002

 
568

 
1,779

 
644

 
1,992

 
571

 
1,744

 
668

Less: Shares subject to repurchase
5

 
5

 
7

 
9

 
5

 
6

 
5

 
10

Number of shares used for basic EPS computation
1,997

 
563

 
1,772

 
635

 
1,987

 
565

 
1,739

 
658

Basic EPS
$
0.31

 
$
0.31

 
$
0.14

 
$
0.14

 
$
0.56

 
$
0.56

 
$
0.23

 
$
0.23

Diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
$
615

 
$
173

 
$
243

 
$
88

 
$
1,111

 
$
316

 
$
398

 
$
151

Reallocation of net income attributable to participating securities
3

 
—

 
2

 
—

 
6

 
—

 
3

 
—

Reallocation of net income as a result of conversion of Class B to Class A common stock
173

 
—

 
88

 
—

 
316

 
—

 
151

 
—

Reallocation of net income to Class B common stock
—

 
7

 
—

 
10

 
—

 
14

 
—

 
17

Net income attributable to common stockholders for diluted EPS
$
791

 
$
180

 
$
333

 
$
98

 
$
1,433

 
$
330

 
$
552

 
$
168

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares used for basic EPS computation
1,997

 
563

 
1,772

 
635

 
1,987

 
565

 
1,739

 
658

Conversion of Class B to Class A common stock
563

 
—

 
635

 
—

 
565

 
—

 
658

 
—

Weighted average effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee stock options
13

 
13

 
73

 
73

 
14

 
14

 
75

 
75

RSUs
36

 
17

 
19

 
19

 
36

 
17

 
22

 
22

Shares subject to repurchase
6

 
4

 
3

 
3

 
7

 
4

 
5

 
5

Number of shares used for diluted EPS computation
2,615

 
597

 
2,502

 
730

 
2,609

 
600

 
2,499

 
760

Diluted EPS
$
0.30

 
$
0.30

 
$
0.13

 
$
0.13

 
$
0.55

 
$
0.55

 
$
0.22

 
$
0.22

Cash and Cash Equivalents, and Marketable Securities
Cash, Cash Equivalents and Marketable Securities
Cash, Cash Equivalents and Marketable Securities
The following table sets forth the cash, cash equivalents and marketable securities (in millions):
 
June 30, 2014
 
December 31, 2013
Cash and cash equivalents:
 
 
 
Cash
$
1,354

 
$
1,044

Cash equivalents:

 

Money market funds
2,959

 
2,279

U.S. government agency securities
71

 
—

Total cash and cash equivalents
4,384

 
3,323

Marketable securities:
 
 
 
U.S. government securities
6,434

 
5,687

U.S. government agency securities
3,138

 
2,439

Total marketable securities
9,572

 
8,126

Total cash, cash equivalents and marketable securities
$
13,956

 
$
11,449


The gross unrealized gains or losses on our marketable securities as of June 30, 2014 and December 31, 2013 were not significant. In addition, there were no securities in a continuous loss position for 12 months or longer as of June 30, 2014 and December 31, 2013.
The following table classifies our marketable securities by contractual maturities (in millions):  
 
June 30, 2014
Due in one year
$
6,232

Due in one to two years
3,340

Total
$
9,572

Fair Value Measurements
Fair Value Measurements
Fair Value Measurements
Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions): 
 
 
 
Fair Value Measurement at
Reporting Date Using
Description
June 30, 2014
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
2,959

 
$
2,959

 
$
—

 
$
—

U.S. government agency securities
71

 
71

 
—

 
—

Marketable securities:
 
 
 
 
 
 
 
U.S. government securities
6,434

 
6,434

 
—

 
—

U.S. government agency securities
3,138

 
3,138

 
—

 
—

Total cash equivalents and marketable securities
$
12,602

 
$
12,602

 
$
—

 
$
—

 
 
 
Fair Value Measurement at
Reporting Date Using
Description
December 31, 2013
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
2,279

 
$
2,279

 
$
—

 
$
—

Marketable securities:
 
 
 
 
 
 
 
U.S. government securities
5,687

 
5,687

 
—

 
—

U.S. government agency securities
2,439

 
2,439

 
—

 
—

Total cash equivalents and marketable securities
$
10,405

 
$
10,405

 
$
—

 
$
—

Property and Equipment
Property and Equipment
Property and Equipment
Property and equipment consisted of the following (in millions): 
 
June 30,
2014
 
December 31,
2013
Network equipment
$
2,553

 
$
2,351

Land
45

 
45

Buildings
1,178

 
1,071

Leasehold improvements
259

 
203

Computer software, office equipment and other
121

 
95

Construction in progress
638

 
377

Total
4,794

 
4,142

Less: Accumulated depreciation
(1,460
)
 
(1,260
)
Property and equipment, net
$
3,334

 
$
2,882


Construction in progress includes costs primarily related to the construction of data centers, expansion of our corporate headquarters in Menlo Park, California and network equipment infrastructure to support our data centers around the world. We did not capitalize any interest during the three and six months ended June 30, 2014 and interest capitalized during the three and six months ended June 30, 2013 was not material.
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill and Intangible Assets
During the six months ended June 30, 2014, we completed multiple business acquisitions which were not material to our condensed consolidated financial statements individually or in the aggregate.
The changes in the carrying amount of goodwill for the six months ended June 30, 2014 are as follows (in millions): 
Balance as of December 31, 2013
$
839

Goodwill acquired
16

Effect of currency translation adjustment
2

Balance as of June 30, 2014
$
857

Intangible assets consisted of the following (in millions):
 
 
 
June 30, 2014
 
December 31, 2013
 
Useful lives from date of acquisitions (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Amortizable intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired patents
2 - 18
 
$
773

 
$
(191
)
 
$
582

 
$
773

 
$
(142
)
 
$
631

Acquired technology
2 - 10
 
241

 
(86
)
 
155

 
227

 
(65
)
 
162

Tradename and other
2 - 10
 
138

 
(60
)
 
78

 
138

 
(48
)
 
90

Total
 
 
$
1,152

 
$
(337
)
 
$
815

 
$
1,138

 
$
(255
)
 
$
883


Amortization expense of intangible assets was $41 million and $82 million for the three and six months ended June 30, 2014, respectively, and $36 million and $69 million for the three and six months ended June 30, 2013, respectively.
As of June 30, 2014, estimated amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):
The remainder of 2014
$
79

2015
151

2016
138

2017
117

2018
82

2019
64

Thereafter
184

 
$
815

Long-term Debt
Long-term Debt
Long-term Debt
In August 2013, we entered into a five-year senior unsecured revolving credit facility (2013 Revolving Credit Facility) that allows us to borrow up to $6.5 billion to fund working capital and general corporate purposes with interest payable on the borrowed amounts set at LIBOR plus 1.0%, as well as an annual commitment fee of 0.10% on the daily undrawn balance of the facility. We paid origination fees at closing of the 2013 Revolving Credit Facility, which fees are being amortized over the term of the facility. Any amounts outstanding under this facility will be due and payable on August 15, 2018. As of June 30, 2014, no amounts had been drawn down and we were in compliance with the covenants under this facility.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Leases
We entered into various capital lease arrangements to obtain property and equipment for our operations. Additionally, on occasion we have purchased property and equipment for which we have subsequently obtained capital financing under sale-leaseback transactions. These agreements are typically for three years, except for a building lease which is for 15 years, with interest rates ranging from 1% to 13%. The leases are secured by the underlying leased buildings, leasehold improvements, and equipment. We have also entered into various non-cancelable operating lease agreements for certain of our offices, equipment, land and data centers with original lease periods expiring between 2014 and 2029. We are committed to pay a portion of the related actual operating expenses under certain of these lease agreements. Certain of these arrangements have free rent periods or escalating rent payment provisions, and we recognize rent expense under such arrangements on a straight-line basis.
Operating lease expense was $33 million and $63 million for the three and six months ended June 30, 2014, respectively, and $32 million and $73 million for the three and six months ended June 30, 2013, respectively.
Other Agreements
In February 2014, we entered into an agreement to acquire WhatsApp Inc. (WhatsApp), a privately-held cross-platform mobile messaging company, for 183,865,778 shares of our Class A common stock and approximately $4 billion in cash, subject to certain adjustments such that the cash paid will comprise at least 25% of the aggregate transaction consideration. After closing, we also expect to grant approximately 46 million RSUs to WhatsApp employees. The value of the equity component of the final purchase price and RSUs granted will be determined for accounting purposes based on the fair value of our common stock on the closing date. This acquisition is subject to customary closing conditions, including certain regulatory approvals, and is expected to close in the second half of 2014. We have agreed to pay a termination fee to WhatsApp of $1 billion in cash and issue a number of shares of our Class A common stock equal to $1 billion, based on the average closing price of the ten trading days preceding such termination, if the closing of this acquisition has not occurred by August 19, 2014. This date may be extended by us to August 19, 2015, if as of August 19, 2014, certain closing conditions applicable to Facebook (other than the receipt of certain regulatory approvals) have been satisfied. We currently expect these conditions will be satisfied and that we will extend the date to August 19, 2015.
In April 2014, we entered into a non-cancelable contractual commitment to spend a minimum of $140 million on network services over a period of 10 years.
Contingencies
Beginning on May 22, 2012, multiple putative class actions, derivative actions, and individual actions were filed in state and federal courts in the United States and in other jurisdictions against us, our directors, and/or certain of our officers alleging violation of securities laws or breach of fiduciary duties in connection with our initial public offering (IPO) and seeking unspecified damages. We believe these lawsuits are without merit, and we intend to continue to vigorously defend them. The vast majority of the cases in the United States, along with multiple cases filed against The NASDAQ OMX Group, Inc. and The Nasdaq Stock Market LLC (collectively referred to herein as NASDAQ) alleging technical and other trading-related errors by NASDAQ in connection with our IPO, were ordered centralized for coordinated or consolidated pre-trial proceedings in the U.S. District Court for the Southern District of New York. In a series of rulings in 2013 and 2014, the court denied our motion to dismiss the consolidated securities class action and granted our motions to dismiss the derivative actions against our directors and certain of our officers. The plaintiffs in four of these derivative actions have filed notices of appeal. In addition, the events surrounding our IPO became the subject of various state and federal government inquiries. In May 2014, the Securities and Exchange Commission (SEC) notified us that it had terminated its inquiry and that no enforcement action had been recommended by the SEC.
We are also party to various legal proceedings and claims that arise in the ordinary course of business. Among these legal matters, Rembrandt Social Media, LP v. Facebook, Inc., et al., was pending in the U.S. District Court for the Eastern District of Virginia. In Rembrandt, the plaintiff alleged that we infringe certain patents held by the plaintiff. The plaintiff was seeking significant monetary damages and equitable relief. A jury trial in this matter took place the week of June 9, 2014. The jury rendered a verdict in our favor, finding no infringement and that all asserted patents are invalid.

With respect to our outstanding legal matters, we believe that the amount or estimable range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of litigation is inherently uncertain. Therefore, if one or more of these legal matters were resolved against us for amounts in excess of management's expectations, our results of operations and financial condition, including in a particular reporting period, could be materially adversely affected.
Stockholders' Equity
Stockholders' Equity
Stockholders' Equity
Share-based Compensation Plans
We maintain two share-based employee compensation plans: the 2012 Equity Incentive Plan (2012 Plan) and the 2005 Stock Plan (collectively, Stock Plans). Our 2012 Plan serves as the successor to our 2005 Stock Plan and provides for the issuance of incentive and nonstatutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance shares and stock bonuses to qualified employees, directors and consultants. Outstanding awards under the 2005 Stock Plan continue to be subject to the terms and conditions of the 2005 Stock Plan. The maximum term for stock options granted under the 2012 Plan may not exceed ten years from the date of grant. Our 2012 Plan will terminate ten years from the date of approval unless it is terminated earlier by our compensation committee.
We have initially reserved 25,000,000 shares of our Class A common stock for issuance under our 2012 Plan, which amount increases on the first day of January of each year through 2022 based on a formula or as determined by the board of directors. Our board of directors elected not to increase the number of shares reserved for issuance in 2014. In addition, shares available for grant under the 2005 Stock Plan, which were reserved but not issued or subject to outstanding awards under the 2005 Stock Plan as of the effective date of our IPO, were added to the reserves of the 2012 Plan and shares that were withheld in connection with the net settlement of RSUs were also added to the reserves of the 2012 Plan. In January 2014, we began requiring that employees sell a portion of the shares that they receive upon the vesting of RSUs in order to cover any required withholding taxes, rather than our previous approach of net share settlement.
In February 2014, we terminated our 2005 Officers' Plan as the only outstanding option issued under this plan had been exercised in full.
The following table summarizes the stock option activity under the Stock Plans during the six months ended June 30, 2014: 
 
Shares Subject to Options Outstanding
 
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value(1)
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Balance as of December 31, 2013
22,102

 
$
3.56

 
 
 
 
Stock options exercised
(3,420
)
 
0.39

 
 
 
 
Balance as of June 30, 2014
18,682

 
$
4.14

 
4.47
 
$
1,180

Stock options vested and expected to vest as of June 30, 2014
18,664

 
$
4.14

 
4.46
 
$
1,179

Stock options exercisable as of June 30, 2014
14,804

 
$
2.29

 
4.04
 
$
962

(1)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing price of our Class A common stock of $67.29 on June 30, 2014.
The aggregate intrinsic value of options exercised was $43 million and $204 million for the three and six months ended June 30, 2014, respectively, and $269 million and $580 million for the three and six months ended June 30, 2013, respectively.
The following table summarizes the activities for our unvested RSUs for the six months ended June 30, 2014:
 
Unvested RSUs
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in thousands)
 
 
Unvested at December 31, 2013
103,971

 
$
27.30

Granted
21,060

 
67.58

Vested
(24,482
)
 
24.36

Forfeited
(4,263
)
 
33.37

Unvested at June 30, 2014
96,286

 
$
36.59



The fair value as of the respective vesting dates of RSUs that vested during the three and six months ended June 30, 2014 was $589 million and $1.54 billion, respectively, and $343 million and $828 million, respectively, during the three and six months ended June 30, 2013.
As of June 30, 2014, there was $3.34 billion of unrecognized share-based compensation expense, of which $3.12 billion is related to RSUs and $222 million is related to restricted shares and stock options. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately three years.
Income Taxes
Income Taxes
Income Taxes
Our tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter we update our estimate of the annual effective tax rate, and if our estimated annual tax rate changes, we make a cumulative adjustment in that quarter. Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, are subject to significant volatility due to several factors, including our ability to accurately predict our income (loss) before provision for income taxes in multiple jurisdictions, including the portions of our share-based compensation that will not generate tax benefits, and the effects of acquisitions and the integration of those acquisitions. In addition, our effective tax rate can be more or less volatile based on the amount of income before provision for income taxes.
Our effective tax rate has exceeded the U.S. statutory rate primarily because of the effect of non-deductible share-based compensation and the impact of acquiring intellectual property and integrating it into our business. Our effective tax rate in the future will depend on the portion of our profits earned within and outside the United States, which will also be affected by our methodologies for valuing our intellectual property and intercompany transactions.
We are subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which we are subject to potential examination include the United States and Ireland. We are under examination by the Internal Revenue Service (IRS) for our 2008, 2009 and 2010 tax years. We believe that adequate amounts have been reserved for any adjustments that may ultimately result from these examinations, and we do not anticipate a significant impact to our gross unrecognized tax benefits within the next 12 months related to these years. Our 2011 and subsequent tax years remain subject to potential examination by the IRS and all tax years starting in 2008 remain subject to potential examination in Ireland. We remain subject to possible examinations or are undergoing audits in various other jurisdictions that are not anticipated to be material to our financial statements.
Although the timing of the resolution, settlement, and closure of any audit is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. However, given the number of years remaining that are subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits.
Geographical Information
Geographical Information
Geographical Information
Revenue by geography is based on the billing address of the marketer or developer. The following tables set forth revenue and property and equipment, net by geographic area (in millions):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Revenue:
 
 
 
 
 
 
 
United States
$
1,260

 
$
818

 
$
2,389

 
$
1,498

Rest of the world (1)
1,650

 
995

 
3,023

 
1,773

Total revenue
$
2,910

 
$
1,813

 
$
5,412

 
$
3,271

 
(1)
No individual country exceeded 10% of our total revenue for any period presented.
 
June 30,
2014
 
December 31,
2013
Property and equipment, net:
 
 
 
United States
$
2,702

 
$
2,368

Sweden
466

 
415

Rest of the world
166

 
99

Total property and equipment, net
$
3,334

 
$
2,882

Subsequent Events
Subsequent Events
Subsequent Events
In July 2014, we completed our acquisition of Oculus VR, Inc., a privately-held company developing virtual reality technology, for 23,071,377 shares of our Class B common stock ($1.6 billion based on the fair value of our common stock on the effective date of the acquisition) and approximately $400 million in cash. Further, up to an additional 3,460,706 shares of our Class B common stock and $60 million in cash will be payable upon the completion of certain milestones. The earn-out portion that would be payable to employee equityholders is also subject to continuous employment through the applicable payment dates.
Given the timing of the completion of the acquisition, we are currently in the process of valuing the assets acquired and liabilities assumed in the acquisition. As a result, we are unable to provide the amount recognized as of the acquisition date for the major classes of assets acquired and liabilities assumed and certain disclosures pertaining to the contingent considerations. We will provide these disclosures in our Quarterly Report on Form 10-Q for the third quarter of 2014.
Summary of Significant Accounting Policies (Policies)
Basis of Presentation 
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
The condensed consolidated balance sheet as of December 31, 2013 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.
The condensed consolidated financial statements include the accounts of Facebook, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
The accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2014.
There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 that have had a material impact on our condensed consolidated financial statements and related notes.
Use of Estimates 
Use of Estimates
Conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, collectability of accounts receivable, contingent liabilities, fair value of financial instruments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, and income taxes. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.
Recent Accounting Pronouncements 
Recent Accounting Pronouncements
 In May 2014, the Financial Accounting Standards Board issued guidance related to revenue from contracts with customers. Under this guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The updated standard will replace most existing revenue recognition guidance under GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard will be effective for us in the first quarter of 2017. We have not yet selected a transition method and we are currently evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.
Earnings per Share (Tables)
Numerators and Denominators of Basic and Diluted EPS Computations for Common Stock
The numerators and denominators of the basic and diluted EPS computations for our common stock were calculated as follows (in millions, except per share amounts): 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
617

 
$
174

 
$
245

 
$
88

 
$
1,116

 
$
317

 
$
400

 
$
152

Less: Net income attributable to participating securities
2

 
1

 
2

 
—

 
5

 
1

 
2

 
1

Net income attributable to common stockholders
$
615

 
$
173

 
$
243

 
$
88

 
$
1,111

 
$
316

 
$
398

 
$
151

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
2,002

 
568

 
1,779

 
644

 
1,992

 
571

 
1,744

 
668

Less: Shares subject to repurchase
5

 
5

 
7

 
9

 
5

 
6

 
5

 
10

Number of shares used for basic EPS computation
1,997

 
563

 
1,772

 
635

 
1,987

 
565

 
1,739

 
658

Basic EPS
$
0.31

 
$
0.31

 
$
0.14

 
$
0.14

 
$
0.56

 
$
0.56

 
$
0.23

 
$
0.23

Diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
$
615

 
$
173

 
$
243

 
$
88

 
$
1,111

 
$
316

 
$
398

 
$
151

Reallocation of net income attributable to participating securities
3

 
—

 
2

 
—

 
6

 
—

 
3

 
—

Reallocation of net income as a result of conversion of Class B to Class A common stock
173

 
—

 
88

 
—

 
316

 
—

 
151

 
—

Reallocation of net income to Class B common stock
—

 
7

 
—

 
10

 
—

 
14

 
—

 
17

Net income attributable to common stockholders for diluted EPS
$
791

 
$
180

 
$
333

 
$
98

 
$
1,433

 
$
330

 
$
552

 
$
168

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares used for basic EPS computation
1,997

 
563

 
1,772

 
635

 
1,987

 
565

 
1,739

 
658

Conversion of Class B to Class A common stock
563

 
—

 
635

 
—

 
565

 
—

 
658

 
—

Weighted average effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee stock options
13

 
13

 
73

 
73

 
14

 
14

 
75

 
75

RSUs
36

 
17

 
19

 
19

 
36

 
17

 
22

 
22

Shares subject to repurchase
6

 
4

 
3

 
3

 
7

 
4

 
5

 
5

Number of shares used for diluted EPS computation
2,615

 
597

 
2,502

 
730

 
2,609

 
600

 
2,499

 
760

Diluted EPS
$
0.30

 
$
0.30

 
$
0.13

 
$
0.13

 
$
0.55

 
$
0.55

 
$
0.22

 
$
0.22

Cash and Cash Equivalents and Marketable Securities (Tables)
Cash, Cash Equivalents and Marketable Securities 
The following table sets forth the cash, cash equivalents and marketable securities (in millions):
 
June 30, 2014
 
December 31, 2013
Cash and cash equivalents:
 
 
 
Cash
$
1,354

 
$
1,044

Cash equivalents:

 

Money market funds
2,959

 
2,279

U.S. government agency securities
71

 
—

Total cash and cash equivalents
4,384

 
3,323

Marketable securities:
 
 
 
U.S. government securities
6,434

 
5,687

U.S. government agency securities
3,138

 
2,439

Total marketable securities
9,572

 
8,126

Total cash, cash equivalents and marketable securities
$
13,956

 
$
11,449

Marketable Securities by Contractual Maturities 
The following table classifies our marketable securities by contractual maturities (in millions):  
 
June 30, 2014
Due in one year
$
6,232

Due in one to two years
3,340

Total
$
9,572

Fair Value Measurements (Tables)
Assets and Liabilities Measured at Fair Value on a Recurring Basis
Assets and liabilities measured at fair value on a recurring basis are summarized below (in millions): 
 
 
 
Fair Value Measurement at
Reporting Date Using
Description
June 30, 2014
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
2,959

 
$
2,959

 
$
—

 
$
—

U.S. government agency securities
71

 
71

 
—

 
—

Marketable securities:
 
 
 
 
 
 
 
U.S. government securities
6,434

 
6,434

 
—

 
—

U.S. government agency securities
3,138

 
3,138

 
—

 
—

Total cash equivalents and marketable securities
$
12,602

 
$
12,602

 
$
—

 
$
—

 
 
 
Fair Value Measurement at
Reporting Date Using
Description
December 31, 2013
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
2,279

 
$
2,279

 
$
—

 
$
—

Marketable securities:
 
 
 
 
 
 
 
U.S. government securities
5,687

 
5,687

 
—

 
—

U.S. government agency securities
2,439

 
2,439

 
—

 
—

Total cash equivalents and marketable securities
$
10,405

 
$
10,405

 
$
—

 
$
—

Property and Equipment (Tables)
Property and Equipment
Property and equipment consisted of the following (in millions): 
 
June 30,
2014
 
December 31,
2013
Network equipment
$
2,553

 
$
2,351

Land
45

 
45

Buildings
1,178

 
1,071

Leasehold improvements
259

 
203

Computer software, office equipment and other
121

 
95

Construction in progress
638

 
377

Total
4,794

 
4,142

Less: Accumulated depreciation
(1,460
)
 
(1,260
)
Property and equipment, net
$
3,334

 
$
2,882

Goodwill and Intangible Assets (Tables)
Changes in Carrying Amount of Goodwill 
The changes in the carrying amount of goodwill for the six months ended June 30, 2014 are as follows (in millions): 
Balance as of December 31, 2013
$
839

Goodwill acquired
16

Effect of currency translation adjustment
2

Balance as of June 30, 2014
$
857

Intangible Assets 
Intangible assets consisted of the following (in millions):
 
 
 
June 30, 2014
 
December 31, 2013
 
Useful lives from date of acquisitions (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Amortizable intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired patents
2 - 18
 
$
773

 
$
(191
)
 
$
582

 
$
773

 
$
(142
)
 
$
631

Acquired technology
2 - 10
 
241

 
(86
)
 
155

 
227

 
(65
)
 
162

Tradename and other
2 - 10
 
138

 
(60
)
 
78

 
138

 
(48
)
 
90

Total
 
 
$
1,152

 
$
(337
)
 
$
815

 
$
1,138

 
$
(255
)
 
$
883

Estimated Amortization Expense for Unamortized Acquired Intangible Assets 
As of June 30, 2014, estimated amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):
The remainder of 2014
$
79

2015
151

2016
138

2017
117

2018
82

2019
64

Thereafter
184

 
$
815

Stockholders' Equity (Tables)
Stock Option Activity under Stock Plans 
The following table summarizes the stock option activity under the Stock Plans during the six months ended June 30, 2014: 
 
Shares Subject to Options Outstanding
 
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value(1)
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Balance as of December 31, 2013
22,102

 
$
3.56

 
 
 
 
Stock options exercised
(3,420
)
 
0.39

 
 
 
 
Balance as of June 30, 2014
18,682

 
$
4.14

 
4.47
 
$
1,180

Stock options vested and expected to vest as of June 30, 2014
18,664

 
$
4.14

 
4.46
 
$
1,179

Stock options exercisable as of June 30, 2014
14,804

 
$
2.29

 
4.04
 
$
962

(1)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the closing price of our Class A common stock of $67.29 on June 30, 2014.
Restricted Stock Units Award Activity 
The following table summarizes the activities for our unvested RSUs for the six months ended June 30, 2014:
 
Unvested RSUs
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in thousands)
 
 
Unvested at December 31, 2013
103,971

 
$
27.30

Granted
21,060

 
67.58

Vested
(24,482
)
 
24.36

Forfeited
(4,263
)
 
33.37

Unvested at June 30, 2014
96,286

 
$
36.59

Geographical Information (Tables)
Revenue and Property and Equipment by Geographic Area
Revenue by geography is based on the billing address of the marketer or developer. The following tables set forth revenue and property and equipment, net by geographic area (in millions):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Revenue:
 
 
 
 
 
 
 
United States
$
1,260

 
$
818

 
$
2,389

 
$
1,498

Rest of the world (1)
1,650

 
995

 
3,023

 
1,773

Total revenue
$
2,910

 
$
1,813

 
$
5,412

 
$
3,271

 
(1)
No individual country exceeded 10% of our total revenue for any period presented.
 
June 30,
2014
 
December 31,
2013
Property and equipment, net:
 
 
 
United States
$
2,702

 
$
2,368

Sweden
466

 
415

Rest of the world
166

 
99

Total property and equipment, net
$
3,334

 
$
2,882

Earnings per Share - Antidilutive Securities (Details) (Restricted Stock Units (RSUs))
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Restricted Stock Units (RSUs)
 
 
 
 
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
 
 
 
 
Antidilutive securities excluded from computation of earnings per share
18 
50 
10 
23 
Earnings per Share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Numerator
 
 
 
 
Net income
$ 791 
$ 333 
$ 1,433 
$ 552 
Less: Net income attributable to participating securities
3 
2 
6 
3 
Net income attributable to common stockholders
788 
331 
1,427 
549 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
2,560 
2,407 
2,552 
2,397 
Basic EPS (in dollars per share)
$ 0.31 
$ 0.14 
$ 0.56 
$ 0.23 
Numerator
 
 
 
 
Net income attributable to common stockholders
788 
331 
1,427 
549 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
2,560 
2,407 
2,552 
2,397 
Number of shares used for diluted EPS computation (in shares)
2,615 
2,502 
2,609 
2,499 
Diluted EPS (in dollars per share)
$ 0.30 
$ 0.13 
$ 0.55 
$ 0.22 
Class A Common Stock
 
 
 
 
Numerator
 
 
 
 
Net income
617 
245 
1,116 
400 
Less: Net income attributable to participating securities
2 
2 
5 
2 
Net income attributable to common stockholders
615 
243 
1,111 
398 
Denominator
 
 
 
 
Weighted average shares outstanding (in shares)
2,002 
1,779 
1,992 
1,744 
Less: Shares subject to repurchase (in shares)
5 
7 
5 
5 
Number of shares used for basic EPS computation (in shares)
1,997 
1,772 
1,987 
1,739 
Basic EPS (in dollars per share)
$ 0.31 
$ 0.14 
$ 0.56 
$ 0.23 
Numerator
 
 
 
 
Net income attributable to common stockholders
615 
243 
1,111 
398 
Reallocation of net income attributable to participating securities
3 
2 
6 
3 
Reallocation of net income as a result of conversion of Class B to Class A common stock
173 
88 
316 
151 
Reallocation of net income to Class B common stock
0 
0 
0 
0 
Net income attributable to common stockholders for diluted EPS
791 
333 
1,433 
552 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
1,997 
1,772 
1,987 
1,739 
Conversion of Class B to Class A common stock (in shares)
563 
635 
565 
658 
Shares subject to repurchase (in shares)
6 
3 
7 
5 
Number of shares used for diluted EPS computation (in shares)
2,615 
2,502 
2,609 
2,499 
Diluted EPS (in dollars per share)
$ 0.30 
$ 0.13 
$ 0.55 
$ 0.22 
Class A Common Stock |
Employee Stock Options
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
13 
73 
14 
75 
Class A Common Stock |
Restricted Stock Units (RSUs)
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
36 
19 
36 
22 
Class B Common Stock
 
 
 
 
Numerator
 
 
 
 
Net income
174 
88 
317 
152 
Less: Net income attributable to participating securities
1 
0 
1 
1 
Net income attributable to common stockholders
173 
88 
316 
151 
Denominator
 
 
 
 
Weighted average shares outstanding (in shares)
568 
644 
571 
668 
Less: Shares subject to repurchase (in shares)
5 
9 
6 
10 
Number of shares used for basic EPS computation (in shares)
563 
635 
565 
658 
Basic EPS (in dollars per share)
$ 0.31 
$ 0.14 
$ 0.56 
$ 0.23 
Numerator
 
 
 
 
Net income attributable to common stockholders
173 
88 
316 
151 
Reallocation of net income attributable to participating securities
0 
0 
0 
0 
Reallocation of net income as a result of conversion of Class B to Class A common stock
0 
0 
0 
0 
Reallocation of net income to Class B common stock
7 
10 
14 
17 
Net income attributable to common stockholders for diluted EPS
$ 180 
$ 98 
$ 330 
$ 168 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
563 
635 
565 
658 
Conversion of Class B to Class A common stock (in shares)
0 
0 
0 
0 
Shares subject to repurchase (in shares)
4 
3 
4 
5 
Number of shares used for diluted EPS computation (in shares)
597 
730 
600 
760 
Diluted EPS (in dollars per share)
$ 0.30 
$ 0.13 
$ 0.55 
$ 0.22 
Class B Common Stock |
Employee Stock Options
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
13 
73 
14 
75 
Class B Common Stock |
Restricted Stock Units (RSUs)
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
17 
19 
17 
22 
Cash and Cash Equivalents and Marketable Securities (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
security
Dec. 31, 2013
security
Jun. 30, 2013
Dec. 31, 2012
Cash, Cash Equivalents, and Marketable Securities
 
 
 
 
Number of positions in a continuous loss position for 12 months or longer
0 
0 
 
 
Total cash and cash equivalents
$ 4,384 
$ 3,323 
$ 3,001 
$ 2,384 
Total marketable securities
9,572 
8,126 
 
 
Total cash, cash equivalents and marketable securities
13,956 
11,449 
 
 
Cash and Cash Equivalents [Member]
 
 
 
 
Cash, Cash Equivalents, and Marketable Securities
 
 
 
 
Cash
1,354 
1,044 
 
 
Money market funds
2,959 
2,279 
 
 
Total cash and cash equivalents
4,384 
3,323 
 
 
U.S. government agency securities
71 
0 
 
 
Investment Type [Member]
 
 
 
 
Cash, Cash Equivalents, and Marketable Securities
 
 
 
 
U.S. government securities
6,434 
5,687 
 
 
U.S. government agency securities
3,138 
2,439 
 
 
Total marketable securities
$ 9,572 
$ 8,126 
 
 
Cash, Cash Equivalents and Marketable Securities - Contractual Maturities of Debt Securities (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Cash and Cash Equivalents, and Marketable Securities [Abstract]
 
 
Due in one year
$ 6,232 
 
Due in one to two years
3,340 
 
Total marketable securities
$ 9,572 
$ 8,126 
Fair Value Measurements (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
$ 9,572 
$ 8,126 
Fair Value, Measurements, Recurring |
Estimate of Fair Value, Fair Value Disclosure
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Total cash equivalents and marketable securities
12,602 
10,405 
Fair Value, Measurements, Recurring |
Estimate of Fair Value, Fair Value Disclosure |
Money Market Funds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
2,959 
2,279 
Fair Value, Measurements, Recurring |
Estimate of Fair Value, Fair Value Disclosure |
US Government Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
6,434 
5,687 
Fair Value, Measurements, Recurring |
Estimate of Fair Value, Fair Value Disclosure |
US Government Agency Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
71 
 
Marketable securities
3,138 
2,439 
Fair Value, Measurements, Recurring |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Total cash equivalents and marketable securities
12,602 
10,405 
Fair Value, Measurements, Recurring |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Money Market Funds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
2,959 
2,279 
Fair Value, Measurements, Recurring |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
US Government Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
6,434 
5,687 
Fair Value, Measurements, Recurring |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
US Government Agency Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
71 
 
Marketable securities
3,138 
2,439 
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Total cash equivalents and marketable securities
0 
0 
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2) |
Money Market Funds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
0 
0 
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2) |
US Government Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
0 
0 
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2) |
US Government Agency Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
0 
 
Marketable securities
0 
0 
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3)
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Total cash equivalents and marketable securities
0 
0 
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3) |
Money Market Funds
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
0 
0 
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3) |
US Government Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Marketable securities
0 
0 
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3) |
US Government Agency Securities
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
Cash equivalents
0 
 
Marketable securities
$ 0 
$ 0 
Property and Equipment (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Property, Plant and Equipment
 
 
Property and equipment, gross
$ 4,794 
$ 4,142 
Less: Accumulated depreciation
(1,460)
(1,260)
Property and equipment, net
3,334 
2,882 
Network equipment
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
2,553 
2,351 
Land
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
45 
45 
Buildings
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
1,178 
1,071 
Leasehold improvements
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
259 
203 
Computer software, office equipment and other
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
121 
95 
Construction in progress
 
 
Property, Plant and Equipment
 
 
Property and equipment, gross
$ 638 
$ 377 
Goodwill and Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Dec. 31, 2013
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Gross Carrying Amount
$ 1,152 
 
$ 1,152 
 
$ 1,138 
Accumulated Amortization
(337)
 
(337)
 
(255)
Net Carrying Amount
815 
 
815 
 
883 
Amortization expense
41 
36 
82 
69 
 
Goodwill
 
 
 
 
 
Goodwill beginning
 
 
839 
 
 
Goodwill acquired
 
 
16 
 
 
Effect of currency translation adjustment
 
 
2 
 
 
Goodwill ending
857 
 
857 
 
 
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
 
 
 
The remainder of 2014
79 
 
79 
 
 
2015
151 
 
151 
 
 
2016
138 
 
138 
 
 
2017
117 
 
117 
 
 
2018
82 
 
82 
 
 
2019
64 
 
64 
 
 
Thereafter
184 
 
184 
 
 
Net Carrying Amount
815 
 
815 
 
883 
Acquired patents
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Gross Carrying Amount
773 
 
773 
 
773 
Accumulated Amortization
(191)
 
(191)
 
(142)
Net Carrying Amount
582 
 
582 
 
631 
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
 
 
 
Net Carrying Amount
582 
 
582 
 
631 
Acquired technology
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Gross Carrying Amount
241 
 
241 
 
227 
Accumulated Amortization
(86)
 
(86)
 
(65)
Net Carrying Amount
155 
 
155 
 
162 
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
 
 
 
Net Carrying Amount
155 
 
155 
 
162 
Tradename and other
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Gross Carrying Amount
138 
 
138 
 
138 
Accumulated Amortization
(60)
 
(60)
 
(48)
Net Carrying Amount
78 
 
78 
 
90 
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
 
 
 
Net Carrying Amount
$ 78 
 
$ 78 
 
$ 90 
Minimum |
Acquired patents
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
2 years 
 
 
Minimum |
Acquired technology
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
2 years 
 
 
Minimum |
Tradename and other
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
2 years 
 
 
Maximum |
Acquired patents
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
18 years 
 
 
Maximum |
Acquired technology
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
10 years 
 
 
Maximum |
Tradename and other
 
 
 
 
 
Goodwill and Intangible Assets Disclosure
 
 
 
 
 
Useful lives from date of acquisitions
 
 
10 years 
 
 
Long-term Debt - Borrowings (Details) (Revolving Credit Facility, 2013 Revolving Credit Facility, USD $)
1 Months Ended
Aug. 31, 2013
Jun. 30, 2014
Revolving Credit Facility |
2013 Revolving Credit Facility
 
 
Debt Instrument
 
 
Term loan facility, term period
5 years 
 
Line of credit facility, maximum borrowing capacity
$ 6,500,000,000 
 
Debt instrument, interest rate during period
LIBOR 
 
Basis spread on variable rate
1.00% 
 
Line of credit facility, unused capacity, commitment fee percentage
0.10% 
 
Line of credit facility, amount outstanding
 
$ 0 
Commitments and Contingencies (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Leases [Abstract]
 
 
 
 
Capital lease agreement period
 
 
3 years 
 
Operating lease expense
$ 33 
$ 32 
$ 63 
$ 73 
Minimum
 
 
 
 
Leases [Abstract]
 
 
 
 
Interest rate
1.00% 
 
1.00% 
 
Expiration date of lease
 
 
2014 
 
Maximum
 
 
 
 
Leases [Abstract]
 
 
 
 
Interest rate
13.00% 
 
13.00% 
 
Expiration date of lease
 
 
2029 
 
Buildings
 
 
 
 
Leases [Abstract]
 
 
 
 
Capital lease agreement period
 
 
15 years 
 
Commitments and Contingencies - Other Agreements (Details) (USD $)
6 Months Ended 0 Months Ended
Jun. 30, 2014
Feb. 28, 2014
WhatsApp
Feb. 28, 2014
Class A Common Stock
WhatsApp
Feb. 28, 2014
Restricted Stock Units (RSUs)
WhatsApp
Business Acquisition [Line Items]
 
 
 
 
Shares to be issued
 
 
183,865,778 
46,000,000 
Cash to be paid
 
$ 4,000,000,000 
 
 
Percentage of transaction consideration
 
25.00% 
 
 
Potential liabilities related to merger agreement contract termination fee, cash
 
1,000,000,000 
 
 
Potential liabilities related to merger agreement contract termination fee, value of shares
 
 
1,000,000,000 
 
Period for closing price
 
10 days 
 
 
Contractual obligation
$ 140,000,000 
 
 
 
Contractual obligation, period
10 years 
 
 
 
Stockholders' Equity - Share-based Compensation Plans (Detail)
6 Months Ended
Jun. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award
 
Share-based employee compensation plans, number
2 
2012 Plan
 
Share-based Compensation Arrangement by Share-based Payment Award
 
Share-based compensation arrangement by share-based payment award, expiration period
10 years 
Share-based compensation arrangement by share-based payment award, expiration period for plan
10 years 
2012 equity incentive plan shares authorized
25,000,000 
2012 Plan |
Maximum
 
Share-based Compensation Arrangement by Share-based Payment Award
 
Shares reserved for issuance increase date range
Jan. 01, 2022 
Stockholders' Equity - Stock Option Activity (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Employee Stock Options
 
Number of Shares
 
Beginning balance
22,102 
Stock options exercised
(3,420)
Ending balance
18,682 
Stock options vested and expected to vest as of period end
18,664 
Stock options exercisable as of period end
14,804 
Weighted Average Exercise Price
 
Beginning Balance (in dollars per share)
$ 3.56 
Stock options exercised (in dollars per share)
$ 0.39 
Ending Balance (in dollars per share)
$ 4.14 
Stock options vested and expected to vest as of period end (in dollars per share)
$ 4.14 
Stock options exercisable as of period end (in dollars per share)
$ 2.29 
Weighted- Average Remaining Contractual Term
 
Balance at period end
4 years 5 months 18 days 
Stock options vested and expected to vest as of period end
4 years 5 months 17 days 
Stock options exercisable as of period end
4 years 0 months 16 days 
Aggregate Intrinsic Value
 
Balance at period end
$ 1,180 1
Stock options vested and expected to vest as of period end
1,179 1
Stock options exercisable as of period end
$ 962 1
Class A Common Stock
 
Aggregate Intrinsic Value
 
Common stock, closing share price
$ 67.29 
Stockholders' Equity - Stock Options Additional Disclosures (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Equity [Abstract]
 
 
 
 
Aggregate intrinsic value of the options exercised
$ 43 
$ 269 
$ 204 
$ 580 
Stockholders' Equity - Restricted Stock Units (Details) (Restricted Stock Units (RSUs), USD $)
In Thousands, except Per Share data, unless otherwise specified
6 Months Ended
Jun. 30, 2014
Restricted Stock Units (RSUs)
 
Number of Shares
 
Unvested at beginning of period (in shares)
103,971 
Granted (in shares)
21,060 
Vested (in shares)
(24,482)
Forfeited (in shares)
(4,263)
Unvested at end of period (in shares)
96,286 
Weighted Average Grant Date Fair Value
 
Unvested at beginning of period
$ 27.30 
Granted
$ 67.58 
Vested
$ 24.36 
Forfeited
$ 33.37 
Unvested at end of period
$ 36.59 
Stockholders' Equity - Additional Award Disclosures (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
Future period share-based compensation expense
$ 3,340 
 
$ 3,340 
 
Future period share-based compensation expense period of recognition
 
 
3 years 
 
Restricted Stock Units (RSUs)
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
Fair value of vested RSUs
589 
343 
1,540 
828 
Future period share-based compensation expense
3,120 
 
3,120 
 
Restricted Shares and Stock Options
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
Future period share-based compensation expense
$ 222 
 
$ 222 
 
Geographical Information - Revenue (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2014
Jun. 30, 2013
Jun. 30, 2014
Jun. 30, 2013
Revenue by Geographical Area
 
 
 
 
Revenue
$ 2,910 
$ 1,813 
$ 5,412 
$ 3,271 
United States
 
 
 
 
Revenue by Geographical Area
 
 
 
 
Revenue
1,260 
818 
2,389 
1,498 
Rest of the World
 
 
 
 
Revenue by Geographical Area
 
 
 
 
Revenue
$ 1,650 1
$ 995 1
$ 3,023 1
$ 1,773 1
Geographical Information - Property and Equipment, Net (Details) (USD $)
In Millions, unless otherwise specified
Jun. 30, 2014
Dec. 31, 2013
Property and Equipment, Net by Geographical Area
 
 
Property and equipment, net
$ 3,334 
$ 2,882 
United States
 
 
Property and Equipment, Net by Geographical Area
 
 
Property and equipment, net
2,702 
2,368 
Sweden
 
 
Property and Equipment, Net by Geographical Area
 
 
Property and equipment, net
466 
415 
Rest of the World
 
 
Property and Equipment, Net by Geographical Area
 
 
Property and equipment, net
$ 166 
$ 99 
Subsequent Events (Details) (Subsequent Event [Member], USD $)
1 Months Ended
Jul. 24, 2014
Subsequent Event [Line Items]
 
Equity Issued in Business Combination, Fair Value Disclosure
$ 1,600,000,000 
Oculus [Member]
 
Subsequent Event [Line Items]
 
Cash to be paid
400,000,000 
Contingent liabilities, cash
$ 60,000,000 
Oculus [Member] |
Class B Common Stock
 
Subsequent Event [Line Items]
 
Shares to be issued
23,071,377 
Contingent liabilities, number of shares
3,460,706