Document and Entity Information

9 Months Ended

Sep. 30, 2015

Nov. 2, 2015

Class A Common Stock

Nov. 2, 2015

Class B Common Stock

Entity Information

Document Type

10-Q

Amendment Flag

false

Document Period End Date

Sep. 30, 2015

Document Fiscal Year Focus

2015

Document Fiscal Period Focus

Q3

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

2,270,457,461

557,536,592

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $)

In Millions, unless otherwise specified

Sep. 30, 2015

Dec. 31, 2014

Current assets:

Cash and cash equivalents

$ 4,308

$ 4,315

Marketable securities

11,526

6,884

Accounts receivable, net of allowances for doubtful accounts of $55 and $39 as of September 30, 2015 and December 31, 2014, respectively

2,010

1,678

Prepaid expenses and other current assets

1,295

793

Total current assets

19,139

13,670

Property and equipment, net

5,335

3,967

Intangible assets, net

3,437

3,929

Goodwill

18,024

17,981

Other assets

534

637

Total assets

46,469

40,184

Current liabilities:

Accounts payable

149

176

Partners payable

241

202

Accrued expenses and other current liabilities

1,338

866

Deferred revenue and deposits

47

66

Current portion of capital lease obligations

17

114

Total current liabilities

1,792

1,424

Capital lease obligations, less current portion

109

119

Other liabilities

3,148

2,545

Total liabilities

5,049

4,088

Stockholders' equity:

Common stock, $0.000006 par value; 5,000 million Class A shares authorized, 2,268 million and 2,234 million shares issued and outstanding, including 9 million and 13 million outstanding shares subject to repurchase, as of September 30, 2015 and December 31, 2014, respectively; 4,141 million Class B shares authorized, 558 million and 563 million shares issued and outstanding, including 3 million and 6 million outstanding shares subject to repurchase, as of September 30, 2015 and December 31, 2014, respecti

0

Additional paid-in capital

33,574

30,225

Accumulated other comprehensive loss

(380)

(228)

Retained earnings

8,226

6,099

Total stockholders' equity

41,420

36,096

Total liabilities and stockholders' equity

$ 46,469

$ 40,184

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $)

In Millions, except Share data, unless otherwise specified

Sep. 30, 2015

Dec. 31, 2014

Current assets:

Accounts receivable, allowances for doubtful accounts

$ 55

$ 39

Stockholders' equity:

Common stock, par value (in dollars per share)

$ 0.000006

Class A Common Stock

Stockholders' equity:

Common stock, shares authorized

5,000,000,000

Common stock, shares issued

2,268,000,000

2,234,000,000

Common stock, shares outstanding

2,268,000,000

2,234,000,000

Common stock, outstanding shares subject to repurchase

9,000,000

13,000,000

Class B Common Stock

Stockholders' equity:

Common stock, shares authorized

4,141,000,000

Common stock, shares issued

558,000,000

563,000,000

Common stock, shares outstanding

558,000,000

563,000,000

Common stock, outstanding shares subject to repurchase

3,000,000

6,000,000

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Revenue

$ 4,501

$ 3,203

$ 12,087

$ 8,615

Costs and expenses:

Cost of revenue

720

565

2,043

1,501

Research and development

1,271

608

3,502

1,555

Marketing and sales

706

374

1,953

1,055

General and administrative

345

259

924

643

Total costs and expenses

3,042

1,806

8,422

4,754

Income from operations

1,459

1,397

3,665

3,861

Interest and other income/(expense), net

(27)

(61)

(28)

(65)

Income before provision for income taxes

1,432

1,336

3,637

3,796

Provision for income taxes

536

530

1,510

1,557

Net income

896

806

2,127

2,239

Less: Net income attributable to participating securities

5

4

12

10

Net income attributable to Class A and Class B common stockholders

891

802

2,115

2,229

Earnings per share attributable to Class A and Class B common stockholders:

Basic (in dollars per share)

$ 0.32

$ 0.31

$ 0.76

$ 0.87

Diluted (in dollars per share)

$ 0.31

$ 0.30

$ 0.75

$ 0.86

Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders:

Basic (in shares)

2,808

2,587

2,796

2,565

Diluted (in shares)

2,863

2,644

2,848

2,616

Share-based compensation expense included in costs and expenses:

Share-based compensation expense

757

353

2,223

941

Cost of revenue

Share-based compensation expense included in costs and expenses:

Share-based compensation expense

21

16

59

44

Research and development

Share-based compensation expense included in costs and expenses:

Share-based compensation expense

598

243

1,767

643

Marketing and sales

Share-based compensation expense included in costs and expenses:

Share-based compensation expense

82

53

236

146

General and administrative

Share-based compensation expense included in costs and expenses:

Share-based compensation expense

$ 56

$ 41

$ 161

$ 108

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Statement of Comprehensive Income [Abstract]

Net income

$ 896

$ 806

$ 2,127

$ 2,239

Other comprehensive income (loss):

Change in foreign currency translation adjustment, net of tax

(22)

(102)

(155)

(123)

Change in unrealized gain/loss on available-for-sale investments and other, net of tax

(1)

(2)

3

0

Comprehensive income

$ 873

$ 702

$ 1,975

$ 2,116

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)

In Millions, unless otherwise specified

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Cash flows from operating activities

Net income

$ 2,127

$ 2,239

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

1,402

810

Share-based compensation

2,214

941

Deferred income taxes

(672)

(30)

Tax benefit from share-based award activity

1,155

1,354

Excess tax benefit from share-based award activity

(1,155)

(1,365)

Other

13

(26)

Changes in assets and liabilities:

Accounts receivable

(405)

(264)

Prepaid expenses and other current assets

(145)

(45)

Other assets

4

(158)

Accounts payable

7

12

Partners payable

40

(22)

Accrued expenses and other current liabilities

291

198

Deferred revenue and deposits

(18)

3

Other liabilities

914

227

Net cash provided by operating activities

5,772

3,874

Cash flows from investing activities

Purchases of property and equipment

(1,831)

(1,314)

Purchases of marketable securities

(10,333)

(6,215)

Sales of marketable securities

4,125

7,391

Maturities of marketable securities

1,563

1,710

Acquisitions of businesses, net of cash acquired, and purchases of intangible assets

(309)

(754)

Change in restricted cash and deposits

77

(113)

Other investing activities, net

0

(2)

Net cash (used in) provided by investing activities

(6,708)

703

Cash flows from financing activities

Taxes paid related to net share settlement

(20)

(3)

Proceeds from exercise of stock options

0

7

Principal payments on capital lease obligations

(107)

(199)

Excess tax benefit from share-based award activity

1,155

1,365

Net cash provided by financing activities

1,028

1,170

Effect of exchange rate changes on cash and cash equivalents

(99)

(71)

Net (decrease) increase in cash and cash equivalents

(7)

5,676

Cash and cash equivalents at beginning of period

4,315

3,323

Cash and cash equivalents at end of period

4,308

8,999

Cash paid during the period for:

Interest

8

11

Income taxes, net

199

101

Non-cash investing and financing activities:

Net change in accounts payable, accrued expenses and other current liabilities, and other liabilities related to property and equipment additions

107

38

Fair value of shares issued related to acquisitions of businesses

0

1,368

Promissory note payable issued in connection with an acquisition

$ 198

$ 0

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, 2014.

The condensed consolidated balance sheet as of December 31, 2014 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, 2015.

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, 2014 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 Pronouncement

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amends the existing accounting standards for revenue recognition. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. As such, the updated standard will be effective for us in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. We are still evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.

Acquisitions

In the nine months ended September 30, 2015, we completed several business acquisitions for total consideration of $488 million, primarily related to a business combination involving land and buildings adjacent to our headquarters in Menlo Park. Included in this amount is a $198 million promissory note payable issued in connection with this particular acquisition. This promissory note payable is classified under accrued expenses and other current liabilities in our condensed consolidated balance sheets. These acquisitions were not material to our condensed consolidated financial statements, either individually or in the aggregate. Accordingly, pro forma historical results of operations related to these business acquisitions during the nine months ended September 30, 2015 have not been presented. We have included the financial results of these business acquisitions in our condensed consolidated financial statements from their respective dates of acquisition.

The following table summarizes the allocation of the total consideration transferred during the nine months ended September 30, 2015, including the related useful lives, where applicable:



	(in millions)		Useful lives (in years)
Finite-lived intangible assets:
Acquired technology	$	30	3
Other	5		3
Land acquired	379
Other net tangible assets acquired	12
Deferred tax assets, net	19
Net assets acquired	$	445
Goodwill	43
Total fair value consideration	$	488

Goodwill generated from all business acquisitions completed during the nine months ended September 30, 2015 is primarily attributable to expected synergies from future growth and potential monetization opportunities. The amount of goodwill generated during this period that is deductible for tax purposes is not material.

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 and inducement awards under a separate non-plan RSU award agreement. 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.

Basic and dilutive securities in our basic and diluted EPS calculation for the three and nine months ended September 30, 2015 and 2014 do not include contingent earn-out shares. Issuance of these earn-out shares is dependent upon the completion of certain milestones. These milestones have not been met as of September 30, 2015 and accordingly, these shares have been excluded from the effect of basic and dilutive securities.

The restricted stock units (RSUs) excluded from the EPS calculation were not material for the three and nine months ended September 30, 2015 and 2014.

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 are calculated as follows (in millions, except per share amounts):



	Three Months Ended September 30,								Nine Months Ended September 30,
	2015				2014				2015				2014
	Class A		Class B		Class A		Class B		Class A		Class B		Class A		Class B
Basic EPS:
Numerator
Net income	$	719	$	177	$	632	$	174	$	1,705	$	422	$	1,747	$	492
Less: Net income attributable to participating securities	4		1		3		1		9		3		8		2
Net income attributable to common stockholders	$	715	$	176	$	629	$	173	$	1,696	$	419	$	1,739	$	490
Denominator
Weighted average shares outstanding	2,264		558		2,032		567		2,253		559		2,006		570
Less: Shares subject to repurchase	10		4		4		8		11		5		5		6
Number of shares used for basic EPS computation	2,254		554		2,028		559		2,242		554		2,001		564
Basic EPS	$	0.32	$	0.32	$	0.31	$	0.31	$	0.76	$	0.76	$	0.87	$	0.87
Diluted EPS:
Numerator
Net income attributable to common stockholders	$	715	$	176	$	629	$	173	$	1,696	$	419	$	1,739	$	490
Reallocation of net income attributable to participating securities	5		—		4		—		12		—		10		—
Reallocation of net income as a result of conversion of Class B to Class A common stock	176		—		173		—		419		—		490		—
Reallocation of net income to Class B common stock	—		3		—		7		—		10		—		18
Net income attributable to common stockholders for diluted EPS	$	896	$	179	$	806	$	180	$	2,127	$	429	$	2,239	$	508
Denominator
Number of shares used for basic EPS computation	2,254		554		2,028		559		2,242		554		2,001		564
Conversion of Class B to Class A common stock	554		—		559		—		554		—		564		—
Weighted average effect of dilutive securities:
Employee stock options	7		7		13		13		8		8		13		13
RSUs	42		8		36		14		39		10		32		13
Shares subject to repurchase	6		2		8		5		5		2		6		3
Number of shares used for diluted EPS computation	2,863		571		2,644		591		2,848		574		2,616		593
Diluted EPS	$	0.31	$	0.31	$	0.30	$	0.30	$	0.75	$	0.75	$	0.86	$	0.86

Cash and Cash Equivalents, and Marketable Securities

The following table sets forth the cash and cash equivalents, and marketable securities (in millions):



	September 30, 2015		December 31, 2014
Cash and cash equivalents:
Cash	$	2,687	$	2,162
Money market funds	1,621		2,153
Total cash and cash equivalents	4,308		4,315
Marketable securities:
U.S. government securities	4,924		2,830
U.S. government agency securities	4,389		2,710
Corporate debt securities	2,213		1,344
Total marketable securities	11,526		6,884
Total cash and cash equivalents, and marketable securities	$	15,834	$	11,199

The gross unrealized gains or losses on our marketable securities as of September 30, 2015 and December 31, 2014 were not significant. In addition, the gross unrealized loss that had been in a continuous loss position for 12 months or longer was not significant as of September 30, 2015. There was no such loss as of December 31, 2014. As of September 30, 2015, we considered the decreases in market value on our marketable securities to be temporary in nature and did not consider any of our investments to be other-than-temporarily impaired.

The following table classifies our marketable securities by contractual maturities (in millions):



	September 30, 2015
Due in one year	$	5,822
Due in one to two years	5,704
Total	$	11,526

Fair Value Measurement

The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy (in millions):



			Fair Value Measurement at Reporting Date Using
Description	September 30, 2015		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	$	1,621	$	1,621	$	—	$	—
Marketable securities:
U.S. government securities	4,924		4,924		—		—
U.S. government agency securities	4,389		4,389		—		—
Corporate debt securities	2,213		—		2,213		—
Total cash equivalents and marketable securities	$	13,147	$	10,934	$	2,213	$	—

Other liabilities:
Contingent consideration liability	$	225	$	—	$	—	$	225



			Fair Value Measurement at Reporting Date Using
Description	December 31, 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	$	2,153	$	2,153	$	—	$	—
Marketable securities:
U.S. government securities	2,830		2,830		—		—
U.S. government agency securities	2,710		2,710		—		—
Corporate debt securities	1,344		—		1,344		—
Total cash equivalents and marketable securities	$	9,037	$	7,693	$	1,344	$	—

Other liabilities:
Contingent consideration liability	$	191	$	—	$	—	$	191

We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value.

We classify our contingent consideration liability in connection with an acquisition in 2014 within Level 3 as factors used to develop the estimated fair value are unobservable inputs that are not supported by market activity. We estimate the fair value of our contingent consideration liability based on the present value of probability-weighted future cash flows related to the contingent earn-out criteria and the fair value of our common stock on each reporting date. Changes in the fair value of the contingent consideration liability subsequent to the acquisition date, such as changes in the probability assessment and the fair value of our common stock, are recognized in earnings in the period when the change in the estimated fair value occurs. During the three and nine months ended September 30, 2015, we recognized an increase in the fair value of our contingent consideration liability of $12 million and $34 million, respectively, in research and development expense in our condensed consolidated statements of income, primarily due to an increase in the fair value of our common stock.

Property and Equipment

Property and equipment consists of the following (in millions):



	September 30, 2015			December 31, 2014
Land	$	583		$	153
Buildings	2,184			1,420
Leasehold improvements	409			304
Network equipment	3,437			3,020
Computer software, office equipment and other	220			149
Construction in progress	537			738
Total	7,370			5,784
Less: Accumulated depreciation	(2,035		)	(1,817		)
Property and equipment, net	$	5,335		$	3,967

Construction in progress includes costs primarily related to construction of data centers and network equipment infrastructure to support our data centers around the world. No interest was capitalized during the three and nine months ended September 30, 2015 and 2014.

Goodwill and Intangible Assets

The changes in the carrying amount of goodwill for the nine months ended September 30, 2015 are as follows (in millions):



Balance as of December 31, 2014	$	17,981
Goodwill acquired	43
Balance as of September 30, 2015	$	18,024

Intangible assets consist of the following (in millions):



		September 30, 2015							December 31, 2014
	Useful lives from date of acquisitions (in years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Acquired users	3 - 7	$	2,056	$	(308	)	$	1,748	$	2,056	$	(85	)	$	1,971
Acquired technology	2 - 10	843		(273		)	570		813		(144		)	669
Acquired patents	2 - 18	785		(309		)	476		773		(239		)	534
Trade names	2 - 7	632		(134		)	498		632		(46		)	586
Other	2 - 10	169		(84		)	85		164		(55		)	109
Total finite-lived intangible assets		$	4,485	$	(1,108	)	$	3,377	$	4,438	$	(569	)	$	3,869

Indefinite-lived intangible assets:
In-process research and development (IPR&D)		$	60	$	—		$	60	$	60	$	—		$	60

Total intangible assets		$	4,545	$	(1,108	)	$	3,437	$	4,498	$	(569	)	$	3,929

As of September 30, 2015, technological feasibility has not been established for our IPR&D intangible assets. They have no alternative future use and, as such, continue to be accounted for as indefinite-lived intangible assets.

Amortization expense of intangible assets was $180 million and $539 million for the three and nine months ended September 30, 2015, respectively, and $59 million and $141 million for the three and nine months ended September 30, 2014, respectively.

As of September 30, 2015, expected amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):



The remainder of 2015	$	180
2016	705
2017	661
2018	605
2019	521
Thereafter	705
Total	$	3,377

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 September 30, 2015, no amounts had been drawn down, and we were in compliance with the covenants under this facility.

Commitments and Contingencies

Commitments

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 2015 and 2032. 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 $47 million and $127 million for the three and nine months ended September 30, 2015, respectively, and $31 million and $94 million for the three and nine months ended September 30, 2014, respectively.

Contingencies

Legal Matters

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. On July 24, 2015, the court of appeals affirmed the dismissal of the derivative actions. On October 7, 2015, the court heard argument on plaintiffs' motion for class certification in the consolidated securities action. 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. 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

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.

We initially reserved 25,000,000 shares of our Class A common stock for issuance under our 2012 Plan. The number of shares reserved for issuance under our 2012 Plan increases automatically on the first day of January of each of 2013 through 2022 by a number of shares of Class A common stock equal to the lesser of (i) 2.5% of the total outstanding shares of our common stock as of the immediately preceding December 31st or (ii) a number of shares determined by the board of directors. Our board of directors elected not to increase the number of shares reserved for issuance in 2015. In addition, shares available for grant under the 2005 Stock Plan, which were reserved but not issued, forfeited or repurchased at their original issue price, 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. 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 board of directors or committee thereof.

The following table summarizes the activities of stock option awards under the Stock Plans for the nine months ended September 30, 2015:



	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, 2014	12,984		$	4.78
Stock options exercised	(3,512	)	0.50
Balance as of September 30, 2015	9,472		$	6.37	3.53	$	791
Stock options vested and expected to vest as of September 30, 2015	9,469		$	6.37	3.53	$	791
Stock options exercisable as of September 30, 2015	7,043		$	4.30	3.05	$	603


(1)	The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the official closing price of our Class A common stock, as reported on the NASDAQ Global Select Market, of $89.90 on September 30, 2015.

The following table summarizes the activities for our unvested RSUs for the nine months ended September 30, 2015:



	Unvested RSUs⁽¹⁾
	Number of Shares		Weighted Average Grant Date Fair Value
	(in thousands)
Unvested at December 31, 2014	138,055		$	55.89
Granted	28,164		79.85
Vested	(28,455	)	41.55
Forfeited	(5,625	)	49.50
Unvested at September 30, 2015	132,139		$	64.36


(1)	Unvested shares include inducement awards issued in connection with an acquisition in 2014 and are subject to the terms, restrictions, and conditions of a separate non-plan RSU award agreement.

The fair value as of the respective vesting dates of RSUs that vested during the three and nine months ended September 30, 2015 was $894 million and $2.38 billion, respectively, and $652 million and $2.19 billion, respectively, during the three and nine months ended September 30, 2014.

As of September 30, 2015, there was $7.70 billion of unrecognized share-based compensation expense, of which $7.06 billion is related to RSUs and $643 million is related to restricted shares, shares with performance conditions related to our contingent consideration liability, and stock options. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately three years.

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 United States statutory rate primarily because of the impact of acquiring intellectual property and integrating it into our business and the effect of non-deductible share-based compensation. 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.

On July 27, 2015, the United States Tax Court issued an opinion in Altera Corp. v. Commissioner related to the treatment of share-based compensation expense in an intercompany cost-sharing arrangement. This opinion concluded that related parties in a cost-sharing arrangement are not required to share share-based compensation. A final decision has yet to be issued by the Tax Court, and this decision may be appealed by the Commissioner. The impact of the conclusions stated by the Tax Court in its opinion was not material to our condensed consolidated financial statements.

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 through 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 future years remain open to examination by the IRS. Our 2010 and future years remain open to examination in Ireland.

Our gross unrecognized tax benefits were $2.58 billion and $1.68 billion as of September 30, 2015 and December 31, 2014, respectively. If the gross unrecognized tax benefits as of September 30, 2015 were realized in a subsequent period, this would result in a tax benefit of $2.01 billion within our provision of income taxes at such time. Our existing tax positions will continue to generate an increase in unrecognized tax benefits in subsequent periods.

Although the timing of the resolution, settlement, and closure of any audits 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

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 September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenue:
United States	$	2,166	$	1,468	$	5,699	$	3,857
Rest of the world ⁽¹⁾	2,335		1,735		6,388		4,758
Total revenue	$	4,501	$	3,203	$	12,087	$	8,615


(1)	No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented.



	September 30, 2015		December 31, 2014
Property and equipment, net:
United States	$	4,295	$	3,256
Sweden	660		514
Rest of the world	380		197
Total property and equipment, net	$	5,335	$	3,967

Summary of Significant Accounting Policies (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, 2014.

The condensed consolidated balance sheet as of December 31, 2014 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, 2015.

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, 2014 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.

New Accounting Pronouncement

Recent Accounting Pronouncement

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) (ASU 2014-09), which amends the existing accounting standards for revenue recognition. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delays the effective date of ASU 2014-09 by one year. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. As such, the updated standard will be effective for us in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. We are still evaluating the effect that the updated standard will have on our consolidated financial statements and related disclosures.

Acquisitions (Tables)

Schedule of Business Acquisitions, Total Consideration Transferred

The following table summarizes the allocation of the total consideration transferred during the nine months ended September 30, 2015, including the related useful lives, where applicable:



	(in millions)		Useful lives (in years)
Finite-lived intangible assets:
Acquired technology	$	30	3
Other	5		3
Land acquired	379
Other net tangible assets acquired	12
Deferred tax assets, net	19
Net assets acquired	$	445
Goodwill	43
Total fair value consideration	$	488

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 are calculated as follows (in millions, except per share amounts):



	Three Months Ended September 30,								Nine Months Ended September 30,
	2015				2014				2015				2014
	Class A		Class B		Class A		Class B		Class A		Class B		Class A		Class B
Basic EPS:
Numerator
Net income	$	719	$	177	$	632	$	174	$	1,705	$	422	$	1,747	$	492
Less: Net income attributable to participating securities	4		1		3		1		9		3		8		2
Net income attributable to common stockholders	$	715	$	176	$	629	$	173	$	1,696	$	419	$	1,739	$	490
Denominator
Weighted average shares outstanding	2,264		558		2,032		567		2,253		559		2,006		570
Less: Shares subject to repurchase	10		4		4		8		11		5		5		6
Number of shares used for basic EPS computation	2,254		554		2,028		559		2,242		554		2,001		564
Basic EPS	$	0.32	$	0.32	$	0.31	$	0.31	$	0.76	$	0.76	$	0.87	$	0.87
Diluted EPS:
Numerator
Net income attributable to common stockholders	$	715	$	176	$	629	$	173	$	1,696	$	419	$	1,739	$	490
Reallocation of net income attributable to participating securities	5		—		4		—		12		—		10		—
Reallocation of net income as a result of conversion of Class B to Class A common stock	176		—		173		—		419		—		490		—
Reallocation of net income to Class B common stock	—		3		—		7		—		10		—		18
Net income attributable to common stockholders for diluted EPS	$	896	$	179	$	806	$	180	$	2,127	$	429	$	2,239	$	508
Denominator
Number of shares used for basic EPS computation	2,254		554		2,028		559		2,242		554		2,001		564
Conversion of Class B to Class A common stock	554		—		559		—		554		—		564		—
Weighted average effect of dilutive securities:
Employee stock options	7		7		13		13		8		8		13		13
RSUs	42		8		36		14		39		10		32		13
Shares subject to repurchase	6		2		8		5		5		2		6		3
Number of shares used for diluted EPS computation	2,863		571		2,644		591		2,848		574		2,616		593
Diluted EPS	$	0.31	$	0.31	$	0.30	$	0.30	$	0.75	$	0.75	$	0.86	$	0.86

Cash and Cash Equivalents, and Marketable Securities (Tables)

Cash and Cash Equivalents, and Marketable Securities

The following table sets forth the cash and cash equivalents, and marketable securities (in millions):



	September 30, 2015		December 31, 2014
Cash and cash equivalents:
Cash	$	2,687	$	2,162
Money market funds	1,621		2,153
Total cash and cash equivalents	4,308		4,315
Marketable securities:
U.S. government securities	4,924		2,830
U.S. government agency securities	4,389		2,710
Corporate debt securities	2,213		1,344
Total marketable securities	11,526		6,884
Total cash and cash equivalents, and marketable securities	$	15,834	$	11,199

Marketable Securities by Contractual Maturities

The following table classifies our marketable securities by contractual maturities (in millions):



	September 30, 2015
Due in one year	$	5,822
Due in one to two years	5,704
Total	$	11,526

Fair Value Measurement (Tables)

Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy (in millions):



			Fair Value Measurement at Reporting Date Using
Description	September 30, 2015		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	$	1,621	$	1,621	$	—	$	—
Marketable securities:
U.S. government securities	4,924		4,924		—		—
U.S. government agency securities	4,389		4,389		—		—
Corporate debt securities	2,213		—		2,213		—
Total cash equivalents and marketable securities	$	13,147	$	10,934	$	2,213	$	—

Other liabilities:
Contingent consideration liability	$	225	$	—	$	—	$	225



			Fair Value Measurement at Reporting Date Using
Description	December 31, 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	$	2,153	$	2,153	$	—	$	—
Marketable securities:
U.S. government securities	2,830		2,830		—		—
U.S. government agency securities	2,710		2,710		—		—
Corporate debt securities	1,344		—		1,344		—
Total cash equivalents and marketable securities	$	9,037	$	7,693	$	1,344	$	—

Other liabilities:
Contingent consideration liability	$	191	$	—	$	—	$	191

Property and Equipment (Tables)

Property and Equipment

Property and equipment consists of the following (in millions):



	September 30, 2015			December 31, 2014
Land	$	583		$	153
Buildings	2,184			1,420
Leasehold improvements	409			304
Network equipment	3,437			3,020
Computer software, office equipment and other	220			149
Construction in progress	537			738
Total	7,370			5,784
Less: Accumulated depreciation	(2,035		)	(1,817		)
Property and equipment, net	$	5,335		$	3,967

Goodwill and Intangible Assets (Tables)

Changes in Carrying Amount of Goodwill

The changes in the carrying amount of goodwill for the nine months ended September 30, 2015 are as follows (in millions):



Balance as of December 31, 2014	$	17,981
Goodwill acquired	43
Balance as of September 30, 2015	$	18,024

Schedule of Finite-Lived Intangible Assets

Intangible assets consist of the following (in millions):



		September 30, 2015							December 31, 2014
	Useful lives from date of acquisitions (in years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Acquired users	3 - 7	$	2,056	$	(308	)	$	1,748	$	2,056	$	(85	)	$	1,971
Acquired technology	2 - 10	843		(273		)	570		813		(144		)	669
Acquired patents	2 - 18	785		(309		)	476		773		(239		)	534
Trade names	2 - 7	632		(134		)	498		632		(46		)	586
Other	2 - 10	169		(84		)	85		164		(55		)	109
Total finite-lived intangible assets		$	4,485	$	(1,108	)	$	3,377	$	4,438	$	(569	)	$	3,869

Indefinite-lived intangible assets:
In-process research and development (IPR&D)		$	60	$	—		$	60	$	60	$	—		$	60

Total intangible assets		$	4,545	$	(1,108	)	$	3,437	$	4,498	$	(569	)	$	3,929

Schedule of Indefinite-Lived Intangible Assets

Intangible assets consist of the following (in millions):



		September 30, 2015							December 31, 2014
	Useful lives from date of acquisitions (in years)	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Finite-lived intangible assets:
Acquired users	3 - 7	$	2,056	$	(308	)	$	1,748	$	2,056	$	(85	)	$	1,971
Acquired technology	2 - 10	843		(273		)	570		813		(144		)	669
Acquired patents	2 - 18	785		(309		)	476		773		(239		)	534
Trade names	2 - 7	632		(134		)	498		632		(46		)	586
Other	2 - 10	169		(84		)	85		164		(55		)	109
Total finite-lived intangible assets		$	4,485	$	(1,108	)	$	3,377	$	4,438	$	(569	)	$	3,869

Indefinite-lived intangible assets:
In-process research and development (IPR&D)		$	60	$	—		$	60	$	60	$	—		$	60

Total intangible assets		$	4,545	$	(1,108	)	$	3,437	$	4,498	$	(569	)	$	3,929

Estimated Amortization Expense for Unamortized Acquired Intangible Assets

As of September 30, 2015, expected amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):



The remainder of 2015	$	180
2016	705
2017	661
2018	605
2019	521
Thereafter	705
Total	$	3,377

Stockholders' Equity (Tables)

Stock Option Activity under Stock Plans

The following table summarizes the activities of stock option awards under the Stock Plans for the nine months ended September 30, 2015:



	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, 2014	12,984		$	4.78
Stock options exercised	(3,512	)	0.50
Balance as of September 30, 2015	9,472		$	6.37	3.53	$	791
Stock options vested and expected to vest as of September 30, 2015	9,469		$	6.37	3.53	$	791
Stock options exercisable as of September 30, 2015	7,043		$	4.30	3.05	$	603


(1)	The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the official closing price of our Class A common stock, as reported on the NASDAQ Global Select Market, of $89.90 on September 30, 2015.

Restricted Stock Units Award Activity

The following table summarizes the activities for our unvested RSUs for the nine months ended September 30, 2015:



	Unvested RSUs⁽¹⁾
	Number of Shares		Weighted Average Grant Date Fair Value
	(in thousands)
Unvested at December 31, 2014	138,055		$	55.89
Granted	28,164		79.85
Vested	(28,455	)	41.55
Forfeited	(5,625	)	49.50
Unvested at September 30, 2015	132,139		$	64.36


(1)	Unvested shares include inducement awards issued in connection with an acquisition in 2014 and are subject to the terms, restrictions, and conditions of a separate non-plan RSU award agreement.

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 September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Revenue:
United States	$	2,166	$	1,468	$	5,699	$	3,857
Rest of the world ⁽¹⁾	2,335		1,735		6,388		4,758
Total revenue	$	4,501	$	3,203	$	12,087	$	8,615


(1)	No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented.



	September 30, 2015		December 31, 2014
Property and equipment, net:
United States	$	4,295	$	3,256
Sweden	660		514
Rest of the world	380		197
Total property and equipment, net	$	5,335	$	3,967

Acquisitions (Details) (USD $)

In Millions, unless otherwise specified

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Dec. 31, 2014

Business Acquisition [Line Items]

Notes payable issued in connection with acquisition

$ 198

$ 0

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]

Goodwill

18,024

17,981

Series of Individually Immaterial Business Acquisitions

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]

Land acquired

379

Other net tangible assets acquired

12

Deferred tax assets, net

19

Net assets acquired

445

Goodwill

43

Total fair value consideration

488

Series of Individually Immaterial Business Acquisitions |
Acquired Technology

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]

Finite-lived intangible assets

30

Finite-lived intangible assets - Useful life (in years)

3 years

Series of Individually Immaterial Business Acquisitions |
Other

Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net [Abstract]

Finite-lived intangible assets

$ 5

Finite-lived intangible assets - Useful life (in years)

3 years

Earnings per Share (Details) (USD $)

In Millions, except Per Share data, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Numerator

Net income

$ 896

$ 806

$ 2,127

$ 2,239

Less: Net income attributable to participating securities

5

4

12

10

Net income attributable to common stockholders

891

802

2,115

2,229

Denominator

Number of shares used for basic EPS computation (in shares)

2,808

2,587

2,796

2,565

Basic EPS (in dollars per share)

$ 0.32

$ 0.31

$ 0.76

$ 0.87

Numerator

Net income attributable to common stockholders

891

802

2,115

2,229

Denominator

Number of shares used for basic EPS computation (in shares)

2,808

2,587

2,796

2,565

Number of shares used for diluted EPS computation (in shares)

2,863

2,644

2,848

2,616

Diluted EPS (in dollars per share)

$ 0.31

$ 0.30

$ 0.75

$ 0.86

Class A Common Stock

Numerator

Net income

719

632

1,705

1,747

Less: Net income attributable to participating securities

4

3

9

8

Net income attributable to common stockholders

715

629

1,696

1,739

Denominator

Weighted average shares outstanding (in shares)

2,264

2,032

2,253

2,006

Less: Shares subject to repurchase (in shares)

10

4

11

5

Number of shares used for basic EPS computation (in shares)

2,254

2,028

2,242

2,001

Basic EPS (in dollars per share)

$ 0.32

$ 0.31

$ 0.76

$ 0.87

Numerator

Net income attributable to common stockholders

715

629

1,696

1,739

Reallocation of net income attributable to participating securities

5

4

12

10

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

176

173

419

490

Reallocation of net income to Class B common stock

0

Net income attributable to common stockholders for diluted EPS

896

806

2,127

2,239

Denominator

Number of shares used for basic EPS computation (in shares)

2,254

2,028

2,242

2,001

Conversion of Class B to Class A common stock (in shares)

554

559

554

564

Shares subject to repurchase (in shares)

6

8

5

6

Number of shares used for diluted EPS computation (in shares)

2,863

2,644

2,848

2,616

Diluted EPS (in dollars per share)

$ 0.31

$ 0.30

$ 0.75

$ 0.86

Class A Common Stock |
Employee Stock Options

Denominator

Share based payment arrangements (in shares)

7

13

8

13

Class A Common Stock |
Restricted Stock Units (RSUs)

Denominator

Share based payment arrangements (in shares)

42

36

39

32

Class B Common Stock

Numerator

Net income

177

174

422

492

Less: Net income attributable to participating securities

1

3

2

Net income attributable to common stockholders

176

173

419

490

Denominator

Weighted average shares outstanding (in shares)

558

567

559

570

Less: Shares subject to repurchase (in shares)

4

8

5

6

Number of shares used for basic EPS computation (in shares)

554

559

554

564

Basic EPS (in dollars per share)

$ 0.32

$ 0.31

$ 0.76

$ 0.87

Numerator

Net income attributable to common stockholders

176

173

419

490

Reallocation of net income attributable to participating securities

0

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

0

Reallocation of net income to Class B common stock

3

7

10

18

Net income attributable to common stockholders for diluted EPS

$ 179

$ 180

$ 429

$ 508

Denominator

Number of shares used for basic EPS computation (in shares)

554

559

554

564

Conversion of Class B to Class A common stock (in shares)

0

Shares subject to repurchase (in shares)

2

5

2

3

Number of shares used for diluted EPS computation (in shares)

571

591

574

593

Diluted EPS (in dollars per share)

$ 0.31

$ 0.30

$ 0.75

$ 0.86

Class B Common Stock |
Employee Stock Options

Denominator

Share based payment arrangements (in shares)

7

13

8

13

Class B Common Stock |
Restricted Stock Units (RSUs)

Denominator

Share based payment arrangements (in shares)

8

14

10

13

Cash and Cash Equivalents, and Marketable Securities (Details) (USD $)

In Millions, unless otherwise specified

Sep. 30, 2015

Dec. 31, 2014

security

Sep. 30, 2014

Dec. 31, 2013

Cash and Cash Equivalents, and Marketable Securities

Cash

$ 2,687

$ 2,162

Money market funds

1,621

2,153

Total cash and cash equivalents

4,308

4,315

8,999

3,323

Marketable securities

11,526

6,884

Total cash and cash equivalents, and marketable securities

15,834

11,199

Number of securities in a continuous loss position for 12 months or longer

0

U.S. government securities

Cash and Cash Equivalents, and Marketable Securities

Marketable securities

4,924

2,830

U.S. government agency securities

Cash and Cash Equivalents, and Marketable Securities

Marketable securities

4,389

2,710

Corporate debt securities

Cash and Cash Equivalents, and Marketable Securities

Marketable securities

$ 2,213

$ 1,344

Cash and Cash Equivalents, and Marketable Securities - Contractual Maturities of Debt Securities (Details) (USD $)

In Millions, unless otherwise specified

Sep. 30, 2015

Dec. 31, 2014

Cash and Cash Equivalents, and Marketable Securities [Abstract]

Due in one year

$ 5,822

Due in one to two years

5,704

Total marketable securities

$ 11,526

$ 6,884

Fair Value Measurement (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2015

Dec. 31, 2014

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

$ 11,526

$ 6,884

Change in fair value of contingent consideration liability

12

34

U.S. government securities

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

4,924

2,830

U.S. government agency securities

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

4,389

2,710

Corporate debt securities

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

2,213

1,344

Fair Value, Measurements, Recurring

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Total cash equivalents and marketable securities

13,147

9,037

Contingent consideration liability

225

191

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

10,934

7,693

Contingent consideration liability

0

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

2,213

1,344

Contingent consideration liability

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

Contingent consideration liability

225

191

Fair Value, Measurements, Recurring |
U.S. government securities

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

4,924

2,830

Fair Value, Measurements, Recurring |
U.S. government securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

4,924

2,830

Fair Value, Measurements, Recurring |
U.S. government securities |
Significant Other Observable Inputs (Level 2)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

0

Fair Value, Measurements, Recurring |
U.S. government securities |
Significant Unobservable Inputs (Level 3)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

0

Fair Value, Measurements, Recurring |
U.S. government agency securities

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

4,389

2,710

Fair Value, Measurements, Recurring |
U.S. government agency securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

4,389

2,710

Fair Value, Measurements, Recurring |
U.S. government agency securities |
Significant Other Observable Inputs (Level 2)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

0

Fair Value, Measurements, Recurring |
U.S. government agency securities |
Significant Unobservable Inputs (Level 3)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

0

Fair Value, Measurements, Recurring |
Corporate debt securities

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

2,213

1,344

Fair Value, Measurements, Recurring |
Corporate debt securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

0

Fair Value, Measurements, Recurring |
Corporate debt securities |
Significant Other Observable Inputs (Level 2)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

2,213

1,344

Fair Value, Measurements, Recurring |
Corporate debt securities |
Significant Unobservable Inputs (Level 3)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Marketable securities

0

Fair Value, Measurements, Recurring |
Money market funds

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Cash equivalents

1,621

2,153

Fair Value, Measurements, Recurring |
Money market funds |
Quoted Prices in Active Markets for Identical Assets (Level 1)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Cash equivalents

1,621

2,153

Fair Value, Measurements, Recurring |
Money market funds |
Significant Other Observable Inputs (Level 2)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Cash equivalents

0

Fair Value, Measurements, Recurring |
Money market funds |
Significant Unobservable Inputs (Level 3)

Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis

Cash equivalents

$ 0

Property and Equipment (Detail) (USD $)

3 Months Ended

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Dec. 31, 2014

Property, Plant and Equipment

Property and equipment, gross

$ 7,370,000,000

$ 5,784,000,000

Less: Accumulated depreciation

(2,035,000,000)

(1,817,000,000)

Property and equipment, net

5,335,000,000

3,967,000,000

Interest costs capitalized

0

Land

Property, Plant and Equipment

Property and equipment, gross

583,000,000

153,000,000

Buildings

Property, Plant and Equipment

Property and equipment, gross

2,184,000,000

1,420,000,000

Leasehold improvements

Property, Plant and Equipment

Property and equipment, gross

409,000,000

304,000,000

Network equipment

Property, Plant and Equipment

Property and equipment, gross

3,437,000,000

3,020,000,000

Computer software, office equipment and other

Property, Plant and Equipment

Property and equipment, gross

220,000,000

149,000,000

Construction in progress

Property, Plant and Equipment

Property and equipment, gross

$ 537,000,000

$ 738,000,000

Goodwill and Intangible Assets (Detail) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Dec. 31, 2014

Goodwill

Goodwill beginning

$ 17,981

Goodwill acquired

43

Goodwill ending

18,024

Finite-Lived Intangible Assets [Line Items]

Gross Carrying Amount

4,485

4,438

Accumulated Amortization

(1,108)

(569)

Net Carrying Amount

3,377

3,869

Indefinite-lived Intangible Assets [Line Items]

Total intangible assets, Gross

4,545

4,498

Accumulated Amortization

(1,108)

(569)

Total intangible assets, Net

3,437

3,929

Amortization expense

180

59

539

141

In-process research and development (IPR&D)

Indefinite-lived Intangible Assets [Line Items]

Indefinite-lived intangible assets

60

Acquired users [Member]

Finite-Lived Intangible Assets [Line Items]

Gross Carrying Amount

2,056

Accumulated Amortization

(308)

(85)

Net Carrying Amount

1,748

1,971

Indefinite-lived Intangible Assets [Line Items]

Accumulated Amortization

(308)

(85)

Technology-Based Intangible Assets [Member]

Finite-Lived Intangible Assets [Line Items]

Gross Carrying Amount

843

813

Accumulated Amortization

(273)

(144)

Net Carrying Amount

570

669

Indefinite-lived Intangible Assets [Line Items]

Accumulated Amortization

(273)

(144)

Patents [Member]

Finite-Lived Intangible Assets [Line Items]

Gross Carrying Amount

785

773

Accumulated Amortization

(309)

(239)

Net Carrying Amount

476

534

Indefinite-lived Intangible Assets [Line Items]

Accumulated Amortization

(309)

(239)

Tradename [Member]

Finite-Lived Intangible Assets [Line Items]

Gross Carrying Amount

632

Accumulated Amortization

(134)

(46)

Net Carrying Amount

498

586

Indefinite-lived Intangible Assets [Line Items]

Accumulated Amortization

(134)

(46)

Other

Finite-Lived Intangible Assets [Line Items]

Gross Carrying Amount

169

164

Accumulated Amortization

(84)

(55)

Net Carrying Amount

85

109

Indefinite-lived Intangible Assets [Line Items]

Accumulated Amortization

$ (84)

$ (55)

Minimum |
Acquired users [Member]

Finite-Lived Intangible Assets [Line Items]

Finite-lived intangible assets - Useful life (in years)

3 years

Minimum |
Technology-Based Intangible Assets [Member]

Finite-Lived Intangible Assets [Line Items]

Finite-lived intangible assets - Useful life (in years)

2 years

Minimum |
Patents [Member]

Finite-Lived Intangible Assets [Line Items]

Finite-lived intangible assets - Useful life (in years)

2 years

Minimum |
Tradename [Member]

Finite-Lived Intangible Assets [Line Items]

Finite-lived intangible assets - Useful life (in years)

2 years

Minimum |
Other

Finite-Lived Intangible Assets [Line Items]

Finite-lived intangible assets - Useful life (in years)

2 years

Maximum |
Acquired users [Member]

Finite-Lived Intangible Assets [Line Items]

Finite-lived intangible assets - Useful life (in years)

7 years

Maximum |
Technology-Based Intangible Assets [Member]

Finite-Lived Intangible Assets [Line Items]

Finite-lived intangible assets - Useful life (in years)

10 years

Maximum |
Patents [Member]

Finite-Lived Intangible Assets [Line Items]

Finite-lived intangible assets - Useful life (in years)

18 years

Maximum |
Tradename [Member]

Finite-Lived Intangible Assets [Line Items]

Finite-lived intangible assets - Useful life (in years)

7 years

Maximum |
Other

Finite-Lived Intangible Assets [Line Items]

Finite-lived intangible assets - Useful life (in years)

10 years

Goodwill and Intangible Assets - Estimated Amortization Expense (Details) (USD $)

In Millions, unless otherwise specified

Sep. 30, 2015

Dec. 31, 2014

Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]

The remainder of 2015

$ 180

2016

705

2017

661

2018

605

2019

521

Thereafter

705

Net Carrying Amount

$ 3,377

$ 3,869

Long-term Debt (Details) (Revolving Credit Facility, 2013 Revolving Credit Facility, USD $)

1 Months Ended

Aug. 31, 2013

Sep. 30, 2015

Revolving Credit Facility |
2013 Revolving Credit Facility

Debt Instrument

Term loan facility, term period (in years)

5 years

Line of credit facility, maximum borrowing capacity

$ 6,500,000,000.0

Debt instrument, interest rate basis during period

LIBOR

Basis spread on variable rate (percent)

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

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Leases [Abstract]

Capital lease agreement period

3 years

Operating lease expense

$ 47

$ 31

$ 127

$ 94

Minimum

Leases [Abstract]

Interest rate

1.00%

Lease expiration year

2015

Maximum

Leases [Abstract]

Interest rate

13.00%

Lease expiration year

2032

Buildings

Leases [Abstract]

Capital lease agreement period

15 years

Stockholders' Equity - Share-based Compensation Plans (Detail)

9 Months Ended

Sep. 30, 2015

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

2012 equity incentive plan shares authorized

25,000,000

Shares reserved for issuance increase percentage

2.50%

Share-based compensation arrangement by share-based payment award, expiration period (in years)

10 years

Share-based compensation arrangement by share-based payment award, expiration period for plan (in years)

10 years

2012 Plan |
Minimum

Share-based Compensation Arrangement by Share-based Payment Award

Shares reserved for issuance increase date range

Jan. 01, 2013

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

9 Months Ended

Sep. 30, 2015

Class A Common Stock

Aggregate Intrinsic Value

Common stock, closing share price (in usd per share)

$ 89.90

Employee Stock Options

Number of Shares

Beginning balance (in shares)

12,984

Stock options exercised (in shares)

(3,512)

Ending balance (in shares)

9,472

Stock options vested and expected to vest as of period end (in shares)

9,469

Stock options exercisable as of period end (in shares)

7,043

Weighted Average Exercise Price

Beginning Balance (in dollars per share)

$ 4.78

Stock options exercised (in dollars per share)

$ 0.50

Ending Balance (in dollars per share)

$ 6.37

Stock options vested and expected to vest as of period end (in dollars per share)

$ 6.37

Stock options exercisable as of period end (in dollars per share)

$ 4.30

Weighted- Average Remaining Contractual Term

Balance at period end (in years)

3 years 6 months 10 days

Stock options vested and expected to vest as of period end (in years)

3 years 6 months 10 days

Stock options exercisable as of period end (in years)

3 years 0 months 17 days

Aggregate Intrinsic Value

Balance at period end

$ 791 ¹

Stock options vested and expected to vest as of period end

791 ¹

Stock options exercisable as of period end

$ 603 ¹

[1] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the official closing price of our Class A common stock, as reported on the NASDAQ Global Select Market, of $89.90 on September 30, 2015.

Stockholders' Equity - Restricted Stock Units (Details) (Restricted Stock Units (RSUs), USD $)

In Millions, except Share data in Thousands, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Restricted Stock Units (RSUs)

Number of Shares

Unvested at beginning of period (in shares)

138,055 ¹

Granted (in shares)

28,164

Vested (in shares)

(28,455)

Forfeited (in shares)

(5,625)

Unvested at end of period (in shares)

132,139 ¹

Weighted Average Grant Date Fair Value

Unvested at beginning of period (in dollars per share)

$ 55.89

Granted (in dollars per share)

$ 79.85

Vested (in dollars per share)

$ 41.55

Forfeited (in dollars per share)

$ 49.50

Unvested at end of period (in dollars per share)

$ 64.36

Fair value of vested RSUs

$ 894

$ 652

$ 2,380

$ 2,190

[1] Unvested shares include inducement awards issued in connection with an acquisition in 2014 and are subject to the terms, restrictions, and conditions of a separate non-plan RSU award agreement.

Stockholders' Equity - Additional Award Disclosures (Details) (USD $)

In Millions, unless otherwise specified

9 Months Ended

Sep. 30, 2015

Share-based Compensation Arrangement by Share-based Payment Award

Future period share-based compensation expense

$ 7,700

Future period share-based compensation expense period of recognition (in years)

3 years

Restricted Stock Units (RSUs)

Share-based Compensation Arrangement by Share-based Payment Award

Future period share-based compensation expense

7,060

Other Awards

Share-based Compensation Arrangement by Share-based Payment Award

Future period share-based compensation expense

$ 643

Income Tax (Details) (USD $)

In Billions, unless otherwise specified

Sep. 30, 2015

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Unrecognized tax benefits

$ 2.58

$ 1.68

Unrecognized tax benefits that would impact effective tax rate

$ 2.01

Geographical Information - Revenue (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

9 Months Ended

Sep. 30, 2015

Sep. 30, 2014

Sep. 30, 2015

Sep. 30, 2014

Revenue by Geographical Area

Revenue

$ 4,501

$ 3,203

$ 12,087

$ 8,615

United States

Revenue by Geographical Area

Revenue

2,166

1,468

5,699

3,857

Rest of the World

Revenue by Geographical Area

Revenue

$ 2,335 ¹

$ 1,735 ¹

$ 6,388 ¹

$ 4,758 ¹

[1] No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented.

Geographical Information - Property and Equipment, Net (Details) (USD $)

In Millions, unless otherwise specified

Sep. 30, 2015

Dec. 31, 2014

Long-Lived Assets By Geographical Area

Property and equipment, net

$ 5,335

$ 3,967

United States

Long-Lived Assets By Geographical Area

Property and equipment, net

4,295

3,256

Sweden

Long-Lived Assets By Geographical Area

Property and equipment, net

660

514

Rest of the World

Long-Lived Assets By Geographical Area

Property and equipment, net

$ 380

$ 197