WebProNews » Earnings

Groupon Earnings Beat Expectations, Stock On The Rise

Chris Crum — Wed, 08 May 2013 20:29:55 +0000

Groupon just released its first earnings report since CEO Andrew Mason was fired. Unlike last time, Groupon actually beat Wall Street expectations this time, and the stock is currently on the rise.

The company reported gross billings of $1.41 billion, revenue of $601.4 million, and GAAP operating income of $21.2 million.

Active customers are up 13% year-over-year.

Eric Lefkofsky, Chairman and co-CEO, said, “We are encouraged by our results, as our local revenues accelerated and our margins improved over the prior quarter. We had record mobile performance as 45% of our North American transactions came from mobile in March, and more than 7 million people downloaded our apps in the quarter.”

Meanwhile the hunt for Mason’s replacement continues.

Here’s the earnings report in its entirety:

CHICAGO–(BUSINESS WIRE)–Groupon, Inc. (NASDAQ: GRPN) today announced financial results for the quarter ended March 31, 2013:

“Management’s Discussion and Analysis of Financial Condition and Results of Operations”

Gross billings of $1.41 billion

Revenue of $601.4 million

GAAP operating income of $21.2 million, or $51.2 million excluding stock compensation

GAAP loss per share of $0.01, or earnings per share of $0.03 excluding stock compensation

“We are encouraged by our results, as our local revenues accelerated and our margins improved over the prior quarter,” said Eric Lefkofsky, Chairman and co-CEO of Groupon. “We had record mobile performance as 45% of our North American transactions came from mobile in March, and more than 7 million people downloaded our apps in the quarter.”

First Quarter 2013 Summary

Gross billings, which reflect the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds, increased 4% to $1.41 billion in the first quarter 2013, compared with $1.35 billion in the first quarter 2012. North America growth of 23% was offset by a decline of 9% in the International segment on a year-over-year basis.

Revenue increased 8% to $601.4 million in the first quarter 2013, compared with $559.3 million in the first quarter 2012. North America revenue growth of 42% was offset by a decline of 18% in the International segment on a year-over-year basis.

Gross profit was $379.0 million in the first quarter 2013, compared with $439.8 million in the first quarter 2012.

Operating income was $21.2 million in the first quarter 2013, compared with $39.6 million in the first quarter 2012. Operating income increased $34.0 million compared with fourth quarter 2012.

Operating income excluding stock compensation and acquisition-related costs, a non-GAAP financial measure, was $51.2 million in the first quarter 2013, compared with $67.6 million in the first quarter 2012. Operating income excluding stock compensation and acquisition-related costs increased $37.4 million compared with fourth quarter 2012.

First quarter 2013 net loss attributable to common stockholders was $4.0 million, or $0.01 per share, including stock compensation and acquisition-related costs of $30.0 million, or $20.9 million net of tax. Earnings per share excluding stock compensation and acquisition-related costs, net of tax, a non-GAAP financial measure, was $0.03 per share.

Operating cash flow for the trailing twelve months ended March 31, 2013 was $191.9 million. Free cash flow, a non-GAAP financial measure, was negative $5.7 million in the first quarter 2013, bringing free cash flow for the trailing twelve months ended March 31, 2013 to $94.7 million.

At the end of the quarter, Groupon had $1.2 billion in cash and cash equivalents.

Definitions and reconciliations of all non-GAAP financial measures are included below in the section titled “Non-GAAP Financial Measures” and in the accompanying tables.

First Quarter Operating Highlights

Global units: Consolidated units, defined as vouchers and products ordered before cancellations and refunds, increased 4% year-over-year to 45 million. North America units increased 37%, and International units decreased 18%.

Active deals: As of March 31, 2013, the number of active deals in North America increased to nearly 40,000, compared with nearly 37,000 at the end of the fourth quarter 2012.

Active customers: Active customers, or customers that have purchased a Groupon within the last twelve months, grew 13% year-over-year, to 41.7 million as of March 31, 2013, comprising 18.2 million in North America, and 23.5 million in International.

Customer spend: Trailing twelve month billings per average active customer decreased to $138 from $144 in the fourth quarter 2012, related primarily to seasonal strength in the fourth quarter holiday period.

Mobile: In March 2013, 45% of North American transactions were completed on mobile devices, compared with nearly 30% in March 2012. In the first quarter 2013, more than 7 million people downloaded Groupon mobile apps worldwide.

Marketplace: The rollout of Groupon’s marketplace (”Pull”) continued to gain momentum, as email accounted for less than 45% of North American transactions in the first quarter 2013.

Outlook

Groupon anticipates incremental investments of between $15 million and $30 million in customer incentives and marketing in the second quarter 2013. As a result, for the second quarter 2013, revenue is expected to be between $575 million and $625 million, and operating income excluding stock compensation and acquisition-related expenses is expected to be between $20 million and $40 million. Stock compensation is expected to be approximately $30 million, and tax expense is expected to be approximately $25 million. This outlook assumes no acquisitions or investments, or material changes in foreign exchange rates.

Groupon reaffirms its guidance that full year 2013 GAAP operating income will exceed $100 million.

Conference Call

A conference call will be webcast live today at 4:00 p.m. CT / 5:00 p.m. ET, and will be available on Groupon’s investor relations website at http://investor.groupon.com. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

Non-GAAP Financial Measures

In addition to financial results reported in accordance with U.S. generally accepted accounting principles (U.S. GAAP), we have provided the following non-GAAP financial measures in this release and the accompanying tables: foreign exchange rate neutral operating results, operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net, Adjusted EBITDA, earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net, and free cash flow. These non-GAAP financial measures are presented to aid investors in better understanding Groupon’s performance and to facilitate comparisons to many of our peers who present similar measures. However, these measures are not intended to be a substitute for those reported in accordance with U.S. GAAP. These measures may be different from non-GAAP financial measures used by other companies, even when similar terms are used to identify such measures. For reconciliations of these measures to the most applicable financial measures under U.S. GAAP, see “Non-GAAP Reconciliation Schedules” and “Supplemental Financial Information and Business Metrics” included in the tables accompanying this release.

We exclude the following items from one or more of our non-GAAP financial measures:

Stock-based compensation. We exclude stock-based compensation because it is primarily non-cash in nature and we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and liquidity.

Acquisition-related expense (benefit), net. Acquisition-related expense (benefit), net represents the change in the fair value of contingent consideration arrangements related to business combinations. The composition of our contingent consideration arrangements and the impact of those arrangements on our operating results vary over time based on a number of factors, including the terms of our business combinations and the timing of those transactions. We exclude acquisition-related expense (benefit), net because we believe that non-GAAP financial measures excluding this item provide meaningful supplemental information about our operating performance and facilitate comparisons to our historical operating results.

Depreciation and amortization. We exclude depreciation and amortization because it is non-cash in nature and we believe that non-GAAP financial measures excluding these items provide meaningful supplemental information about our operating performance and liquidity.

Descriptions of the non-GAAP financial measures included in this release and the accompanying tables are as follows:

Foreign exchange rate neutral operating results show our current period operating results as if foreign currency exchange rates had remained the same as those in effect in the comparable period.

Operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net is a non-GAAP financial measure that comprises the consolidated total of the segment operating income (loss) of our two segments, North America and International. We use consolidated operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net to allocate resources and evaluate performance internally.

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) excluding income taxes, interest and other non-operating items, depreciation and amortization, stock-based compensation, and acquisition-related expense (benefit), net. Adjusted EBITDA is similar to Operating income (loss) excluding stock-based compensation and acquisition-related expense (benefit), net, except Adjusted EBITDA also excludes depreciation and amortization. Our definition of Adjusted EBITDA may differ from similar measures used by other companies, even when similar terms are used to identify such measures. We believe that Adjusted EBITDA is a meaningful measure for evaluating our operating performance and liquidity.

Earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net is a non-GAAP financial measure that adjusts our earnings (loss) per share to exclude the impact of stock-based compensation expense, acquisition-related expense (benefit), net and the income tax effect of those items. We believe that this non-GAAP financial measure provides meaningful supplemental information for evaluating our operating performance.

Free cash flow is a non-GAAP financial measure that comprises net cash provided by operating activities less purchases of property and equipment and capitalized software. We use free cash flow, and ratios based on it, to conduct and evaluate our business because, although it is similar to cash flow from operations, we believe that it typically represents a more useful measure of cash flows because purchases of fixed assets, software developed for internal use and website development costs are necessary components of our ongoing operations. Free cash flow is not intended to represent the total increase or decrease in Groupon’s cash balance for the applicable period.

Note on Forward-Looking Statements

The statements contained in this release that refer to plans and expectations for the next quarter or the future are forward-looking statements that involve a number of risks and uncertainties, and actual results could differ materially from those discussed. The risks and uncertainties that could cause our results to differ materially from those included in the forward-looking statements include, but are not limited to, volatility in our revenue and operating results; risks related to our business strategy; responding to changes in the market; effectively dealing with challenges arising from our international operations; retaining existing customers and adding new customers; retaining existing merchant partners and adding new merchant partners; incurring expenses as we expand our business; competing against competitors with more financial resources than us; maintaining favorable terms with our business partners; maintaining a strong brand; managing inventory and order fulfillment; integrating our technology platforms; managing refund risks; retaining our executive team; litigation; regulations, including the CARD Act and regulation of the Internet; tax liabilities; tax legislation; maintaining our information technology infrastructure; security breaches; protecting our intellectual property; handling acquisitions, joint ventures and strategic investments effectively; seasonality; payment-related risks; customer and merchant partner fraud; global economic uncertainty; compliance with rules and regulations associated with being a public company; and our ability to raise capital if necessary. We urge you to refer to the factors included under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, copies of which may be obtained by visiting the company’s Investor Relations web site at http://investor.groupon.com or the SEC’s web site at www.sec.gov. Groupon’s actual results could differ materially from those predicted or implied and reported results should not be considered an indication of future performance.

You should not rely upon forward-looking statements as predictions of future events. Although Groupon believes that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. Moreover, neither the company nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. The forward-looking statements reflect Groupon’s expectations as of May 8, 2013. Groupon undertakes no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in its expectations.

Groupon encourages investors to use its investor relations website as a way of easily finding information about the company. Groupon promptly makes available on this website, free of charge, the reports that the company files or furnishes with the SEC, corporate governance information (including Groupon’s Global Code of Conduct), and select press releases and social media postings.

About Groupon

Groupon (NASDAQ: GRPN) is a global leader in local commerce, making it easy for people around the world to search and discover great businesses at unbeatable prices. Groupon is reinventing the traditional small business world by providing merchants with a suite of products and services, including customizable deals, payments processing capabilities and point-of-sale solutions to help them attract more customers and run their operations more effectively. By leveraging the company’s global relationships and scale, Groupon offers consumers incredible deals on the best stuff to eat, see, do, and buy in 48 countries. With Groupon, shoppers discover the best a city has to offer with Groupon Local, enjoy vacations with GrouponGetaways, and find a curated selection of electronics, fashion, home furnishings and more with Groupon Goods. To subscribe to Groupon emails, visit www.Groupon.com. To learn more about the company’s merchant solutions and how to work with Groupon, visit www.GrouponWorks.com.

Groupon, Inc.

Summary Consolidated and Segment Results

(in thousands, except share and per share amounts)

(unaudited)

Three Months Ended
March 31, Y/Y %

Growth

2013 2012 Y/Y %
Growth FX Effect ⁽²⁾ excluding
FX⁽²⁾

Gross Billings ⁽¹⁾

North America $ 681,319 $ 553,557 23.1 % $ (59 ) 23.1 %

International 726,450 801,243 (9.3 ) % (12,460 ) (7.8 ) %

Consolidated gross billings $ 1,407,769 $ 1,354,800 3.9 % $ (12,519 ) 4.8 %

Revenue

North America $ 339,554 $ 238,565 42.3 % $ (27 ) 42.3 %

International 261,848 320,718 (18.4 ) % (4,540 ) (16.9 ) %

Consolidated revenue $ 601,402 $ 559,283 7.5 % $ (4,567 ) 8.3 %

Income from operations $ 21,178 $ 39,639 (46.6 ) % $ 2,377 (52.6 ) %

Net loss attributable to common stockholders $ (3,992 ) $ (11,695 ) 65.9 % $ 2,614 43.5 %

Net loss per share

Basic $ (0.01 ) $ (0.02 )

Diluted $ (0.01 ) $ (0.02 )

Weighted average basic shares outstanding 658,800,417 644,097,375

Weighted average diluted shares outstanding 658,800,417 644,097,375

(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.

(2) Represents change in financial measures that would have resulted had average exchange rates in the reporting period been the same as those in effect during the three months ended March 31, 2012.

Groupon, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

Three Months Ended

March 31,

2013 2012

Operating activities

Net loss $ (3,242 ) $ (3,593 )

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

Depreciation and amortization 20,700 11,716

Stock-based compensation 29,907 28,003

Deferred income taxes (258 ) (876 )

Excess tax benefits on stock-based compensation (832 ) (2,881 )

Loss on equity method investments 19 5,128

Acquisition-related expense (benefit), net 68 (52 )

Change in assets and liabilities, net of acquisitions:

Restricted cash 2,523 (1,357 )

Accounts receivable (7,684 ) (11,878 )

Prepaid expenses and other current assets 12,527 (4,121 )

Accounts payable (19,606 ) (1,821 )

Accrued merchant and supplier payables (39,417 ) 46,000

Accrued expenses and other current liabilities 13,302 13,420

Other, net 753 6,026

Net cash provided by operating activities 8,760 83,714

Net cash used in investing activities (30,679 ) (46,444 )

Net cash used in financing activities (9,342 ) (8,275 )

Effect of exchange rate changes on cash and cash equivalents (12,378 ) 9,059

Net (decrease) increase in cash and cash equivalents (43,639 ) 38,054

Cash and cash equivalents, beginning of period 1,209,289 1,122,935

Cash and cash equivalents, end of period $ 1,165,650 $ 1,160,989

Groupon, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

Three Months Ended March 31,

2013 2012

Revenue:

Third party and other $ 439,108 $ 540,053

Direct 162,294 19,230

Total revenue 601,402 559,283

Cost of revenue:

Third party and other 70,016 102,629

Direct 152,377 16,869

Total cost of revenue 222,393 119,498

Gross Profit 379,009 439,785

Operating expenses:

Marketing 49,557 116,615

Selling, general and administrative 308,206 283,583

Acquisition-related expense (benefit), net 68 (52 )

Total operating expenses 357,831 400,146

Income from operations 21,178 39,639

Interest and other expense, net (5,064 ) (3,539 )

Loss on equity method investments (19 ) (5,128 )

Income before provision for income taxes 16,095 30,972

Provision for income taxes 19,337 34,565

Net loss (3,242 ) (3,593 )

Less: Net income attributable to noncontrolling interests (750 ) (880 )

Net loss attributable to Groupon, Inc. (3,992 ) (4,473 )

Adjustment of redeemable noncontrolling interests to redemption value - (7,222 )

Net loss attributable to common stockholders $ (3,992 ) $ (11,695 )

Net loss per share

Basic $ (0.01 ) $ (0.02 )

Diluted $ (0.01 ) $ (0.02 )

Weighted average number of shares outstanding

Basic 658,800,417 644,097,375

Diluted 658,800,417 644,097,375

Groupon, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share amounts)

(unaudited)

March 31, December 31,

2013 2012

Assets

Current assets:

Cash and cash equivalents $ 1,165,650 $ 1,209,289

Accounts receivable, net 102,717 96,713

Deferred income taxes 30,679 31,211

Prepaid expenses and other current assets 132,324 150,573

Total current assets 1,431,370 1,487,786

Property, equipment and software, net of accumulated depreciation and amortization of $60,291 and $46,236, respectively 128,773 121,072

Goodwill 205,466 206,684

Intangible assets, net 36,838 42,597

Investments 97,245 84,209

Deferred income taxes, non-current 29,710 29,916

Other non-current assets 52,855 59,210

Total Assets $ 1,982,257 $ 2,031,474

Liabilities and Equity

Current liabilities:

Accounts payable $ 40,898 $ 59,865

Accrued merchant and supplier payables 620,485 671,305

Accrued expenses 245,889 246,924

Deferred income taxes 52,875 53,700

Other current liabilities 140,433 136,647

Total current liabilities 1,100,580 1,168,441

Deferred income taxes, non-current 19,917 20,860

Other non-current liabilities 97,791 100,072

Total Liabilities 1,218,288 1,289,373

Commitments and contingencies

Stockholders’ Equity

Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 657,774,882 and 654,523,706 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively 66 65

Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at March 31, 2013 and December 31, 2012 - -

Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at March 31, 2013, and December 31, 2012 - -

Additional paid-in capital 1,508,972 1,485,006

Accumulated deficit (757,469 ) (753,477 )

Accumulated other comprehensive income 14,787 12,446

Total Groupon, Inc. Stockholders’ Equity 766,356 744,040

Noncontrolling interests (2,387 ) (1,939 )

Total Equity 763,969 742,101

Total Liabilities and Equity $ 1,982,257 $ 2,031,474

Groupon, Inc.

Segment Information

(in thousands)

(unaudited)

Three Months Ended March 31,

2013 2012

North America

Gross Billings⁽¹⁾ $ 681,319 $ 553,557

Revenue $ 339,554 $ 238,565

Segment cost of revenue and operating expenses⁽²⁾ 298,188 198,393

Segment operating income $ 41,366 $ 40,172

Segment operating income as a percent of segment revenue 12.2 % 16.8 %

International

Gross Billings ⁽¹⁾ $ 726,450 $ 801,243

Revenue $ 261,848 $ 320,718

Segment cost of revenue and operating expenses⁽²⁾ 252,061 293,300

Segment operating income $ 9,787 $ 27,418

Segment operating income as a percent of segment revenue 3.7 % 8.5 %

Consolidated

Gross Billings ⁽¹⁾ $ 1,407,769 $ 1,354,800

Revenue $ 601,402 $ 559,283

Segment cost of revenue and operating expenses⁽²⁾ 550,249 491,693

Segment operating income $ 51,153 $ 67,590

Segment operating income as a percent of segment revenue 8.5 % 12.1 %

Stock-based compensation 29,907 28,003

Acquisition-related expense (benefit), net 68 (52 )

Income from operations 21,178 39,639

Interest and other expense, net 5,064 3,539

Loss on equity method investments 19 5,128

Income before provision for income taxes 16,095 30,972

Provision for income taxes 19,337 34,565

Net loss $ (3,242 ) $ (3,593 )

(1) Represents the total dollar value of customer purchases of goods and services, excluding any applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.

(2) Represents cost of revenue and operating expenses, excluding stock-based compensation and acquisition-related expense (benefit), net.

Groupon, Inc.

Non-GAAP Reconciliation Schedules

(in thousands, except share and per share amounts)

(unaudited)

The following are reconciliations of earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net and foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures. See “Supplemental Financial Information and Business Metrics” for reconciliations of Adjusted EBITDA, operating income (loss), excluding stock-based compensation and acquisition-related benefit (expense), net and free cash flow to the most comparable U.S. GAAP financial measures.

The following is a reconciliation of net loss per share to earnings per share excluding stock-based compensation and acquisition-related expense, net for the three months ended March 31, 2013:

Three Months Ended

March 31, 2013

Net loss attributable to common stockholders $ (3,992 )

Stock-based compensation 29,907

Acquisition-related expense, net 68

Income tax effect of adjustments (9,113 )

Net income attributable to common stockholders excluding stock-based

compensation and acquisition-related expense, net $ 16,870

Diluted shares 658,800,417

Incremental diluted shares ⁽¹⁾ 12,175,734

Adjusted diluted shares 670,976,151

Diluted net loss per share $ (0.01 )

Impact of stock-based compensation and acquisition-related

expense, net and the related income tax effects 0.04

Diluted earnings per share excluding stock-based compensation and

acquisition-related expense, net $ 0.03

(1) Outstanding equity awards are not reflected in the diluted loss per share calculation for the three months ended March 31, 2013 because the effect would be antidilutive. However, those awards have been reflected in the calculation of diluted earnings per share excluding stock-based compensation and acquisition-related expense, net for the three months ended March 31, 2013 because they have a dilutive effect on that calculation.

The following is a reconciliation of foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, “Gross Billings,” “Revenue” and “Income from operations,” for the three months ended March 31, 2013. The effect on the Company’s gross billings, revenue and income from operations from changes in exchange rates versus the U.S. Dollar for the three months ended March 31, 2013 was as follows:

Three Months Ended March 31, 2013 Three Months Ended March 31, 2013

At Avg. Exchange At Avg. Exchange

Q1 2012
Rates ⁽¹⁾ Rate
Effect ⁽²⁾ As
Reported Q4 2012
Rates ⁽³⁾ Rate
Effect ⁽²⁾ As
Reported

Gross billings $ 1,420,288 $ (12,519 ) $ 1,407,769 $ 1,408,597 $ (828 ) $ 1,407,769

Revenue $ 605,969 $ (4,567 ) $ 601,402 $ 601,584 $ (182 ) $ 601,402

Income from operations $ 18,801 $ 2,377 $ 21,178 $ 21,698 $ (520 ) $ 21,178

(1) Represents the outcome that would have resulted had average exchange rates in the reported period been the same as those in effect during the three months ended March 31, 2012.

(2) Represents the increase or decrease in reported amounts resulting from changes in exchange rates from those in effect in the comparable period.

(3) Represents the outcome that would have resulted had average exchange rates in the reported period been the same as those in effect during the three months ended December 31, 2012.

Groupon, Inc.

Supplemental Financial Information and Business Metrics⁽¹³⁾

(financial data in thousands, except per share data; active customers in millions)

(unaudited)

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

Segments

North America Segment

Gross Billings ⁽¹⁾

Local ⁽²⁾ Gross Billings

Third Party and Other $ 424,124 $ 412,348 $ 349,293 $ 430,255 $ 450,140

Direct 5,299 288 6,450 - -

Total Local Gross Billings $ 429,423 $ 412,636 $ 355,743 $ 430,255 $ 450,140

Goods Gross Billings

Third Party and Other $ 75,908 $ 40,173 $ 25,508 $ 31,270 $ 17,294

Direct 2,282 52,773 126,608 209,575 148,065

Total Goods Gross Billings $ 78,190 $ 92,946 $ 152,116 $ 240,845 $ 165,359

Travel and Other Gross Billings

Third Party and Other $ 45,944 $ 42,693 $ 44,510 $ 47,852 $ 65,820

Direct - - - - -

Total Travel and Other Gross Billings $ 45,944 $ 42,693 $ 44,510 $ 47,852 $ 65,820

Total Gross Billings

Third Party and Other $ 545,976 $ 495,214 $ 419,311 $ 509,377 $ 533,254

Direct 7,581 53,061 133,058 209,575 148,065

Total Gross Billings $ 553,557 $ 548,275 $ 552,369 $ 718,952 $ 681,319

Year-over-year growth 76 % 48 % 38 % 51 % 23 %

% of Consolidated Gross Billings 41 % 43 % 45 % 47 % 48 %

Gross Billings Trailing Twelve Months (TTM) $ 1,800,332 $ 1,978,617 $ 2,130,008 $ 2,373,153 $ 2,500,915

Revenue ⁽³⁾

Local Revenue

Third Party and Other $ 191,128 $ 184,189 $ 134,993 $ 142,454 $ 171,593

Direct 5,299 288 6,450 - -

Total Local Revenue $ 196,427 $ 184,477 $ 141,443 $ 142,454 $ 171,593

Goods Revenue

Third Party and Other $ 24,941 $ 10,387 $ 13,064 $ 11,877 $ 3,144

Direct 2,282 52,774 126,608 209,575 148,065

Total Goods Revenue $ 27,223 $ 63,161 $ 139,672 $ 221,452 $ 151,209

Travel and Other Revenue

Third Party and Other $ 14,915 $ 12,543 $ 10,488 $ 11,445 $ 16,752

Direct - - - - -

Total Travel and Other Revenue $ 14,915 $ 12,543 $ 10,488 $ 11,445 $ 16,752

Total Revenue

Third Party and Other $ 230,984 $ 207,119 $ 158,545 $ 165,776 $ 191,489

Direct 7,581 53,062 133,058 209,575 148,065

Total Revenue $ 238,565 $ 260,181 $ 291,603 $ 375,351 $ 339,554

Year-over-year growth 75 % 66 % 81 % 109 % 42 %

% of Consolidated Revenue 43 % 46 % 51 % 59 % 56 %

Revenue TTM $ 736,933 $ 839,909 $ 969,987 $ 1,165,700 $ 1,266,689

Cost of Revenue ⁽⁴⁾

Local Cost of Revenue

Third Party and Other $ 51,782 $ 35,710 $ 13,176 $ 23,203 $ 25,915

Direct 4,663 234 5,231 - -

Total Local Cost of Revenue $ 56,445 $ 35,944 $ 18,407 $ 23,203 $ 25,915

Goods Cost of Revenue

Third Party and Other $ 6,757 $ 2,014 $ 1,275 $ 1,935 $ 475

Direct 2,008 45,925 110,329 196,789 138,278

Total Goods Cost of Revenue $ 8,765 $ 47,939 $ 111,604 $ 198,724 $ 138,753

Travel and Other Cost of Revenue

Third Party and Other $ 4,041 $ 2,431 $ 1,024 $ 1,864 $ 2,530

Direct - - - - -

Total Travel and Other Cost of Revenue $ 4,041 $ 2,431 $ 1,024 $ 1,864 $ 2,530

Total Cost of Revenue

Third Party and Other $ 62,580 $ 40,155 $ 15,475 $ 27,002 $ 28,920

Direct 6,671 46,159 115,560 196,789 138,278

Total Cost of Revenue $ 69,251 $ 86,314 $ 131,035 $ 223,791 $ 167,198

% of North America Total Revenue 29 % 33 % 45 % 60 % 49 %

Gross Profit

Local Gross Profit

Third Party and Other $ 139,346 $ 148,479 $ 121,817 $ 119,251 $ 145,678

Direct 636 54 1,219 - -

Total Local Gross Profit $ 139,982 $ 148,533 $ 123,036 $ 119,251 $ 145,678

% of North America Total Local Revenue 71.3 % % 80.5 % % 87.0 % % 83.7 % % 84.9 % %

% of North America Total Local Gross Billings 32.6 % % 36.0 % % 34.6 % % 27.7 % % 32.4 % %

Goods Gross Profit

Third Party and Other $ 18,184 $ 8,373 $ 11,789 $ 9,942 $ 2,669

Direct 274 6,849 16,279 12,786 9,787

Total Goods Gross Profit $ 18,458 $ 15,222 $ 28,068 $ 22,728 $ 12,456

% of North America Total Goods Revenue 67.8 % % 24.1 % % 20.1 % % 10.3 % % 8.2 % %

% of North America Total Goods Gross Billings 23.6 % % 16.4 % % 18.5 % % 9.4 % % 7.5 % %

Travel and Other Gross Profit

Third Party and Other $ 10,874 $ 10,112 $ 9,464 $ 9,581 $ 14,222

Direct - - - - -

Total Travel and Other Gross Profit $ 10,874 $ 10,112 $ 9,464 $ 9,581 $ 14,222

% of North America Total Travel and Other Revenue 72.9 % % 80.6 % % 90.2 % % 83.7 % % 84.9 % %

% of North America Total Travel and Other Gross Billings 23.7 % % 23.7 % % 21.3 % % 20.0 % % 21.6 % %

Total Gross Profit

Third Party and Other $ 168,404 $ 166,964 $ 143,070 $ 138,774 $ 162,569

Direct 910 6,903 17,498 12,786 9,787

Total Gross Profit $ 169,314 $ 173,867 $ 160,568 $ 151,560 $ 172,356

% of North America Total Revenue 71.0 % % 66.8 % % 55.1 % % 40.4 % % 50.8 % %

% of North America Total Gross Billings 30.6 % % 31.7 % % 29.1 % % 21.1 % % 25.3 % %

Operating Income Excl Stock-Based Compensation (SBC), Acquisition-Related Expenses $ 40,172 $ 43,429 $ 39,093 $ 17,032 $ 41,366

Year-over-year growth N/A N/A 108 % (7 ) % 3 %

% of Consolidated Operating Income Excl SBC, Acq-Related 59 % 60 % 77 % 124 % 81 %

Operating Margin Excl SBC, Acq-Related (% of North America Total revenue) 16.8 % 16.7 % 13.4 % 4.5 % 12.2 %

Year-over-year growth (bps) 3,278 2,337 170 (570 ) (460 )

Operating Income TTM Excl SBC, Acq-Related $ 66,746 $ 120,676 $ 140,933 $ 139,726 $ 140,920

Operating Margin TTM Excl SBC, Acq-Related (% of North America Total TTM revenue) 9.1 % 14.4 % 14.5 % 12.0 % 11.1 %

Year-over-year growth (bps) 2,197 2,601 2,100 1,120 200

International Segment Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

Gross Billings

Local Gross Billings

Third Party and Other $ 465,879 $ 423,313 $ 328,044 $ 368,898 $ 379,413

Direct - - - - -

Total Local Gross Billings $ 465,879 $ 423,313 $ 328,044 $ 368,898 $ 379,413

Goods Gross Billings

Third Party and Other $ 199,988 $ 186,899 $ 211,464 $ 285,057 $ 212,736

Direct 7,396 12,288 11,930 15,601 14,229

Total Goods Gross Billings $ 207,384 $ 199,187 $ 223,394 $ 300,658 $ 226,965

Travel and Other Gross Billings

Third Party and Other $ 123,727 $ 115,901 $ 114,449 $ 131,944 $ 120,072

Direct 4,253 - - - -

Total Travel and Other Gross Billings $ 127,980 $ 115,901 $ 114,449 $ 131,944 $ 120,072

Total Gross Billings

Third Party and Other $ 789,594 $ 726,113 $ 653,957 $ 785,899 $ 712,221

Direct 11,649 12,288 11,930 15,601 14,229

Total Gross Billings $ 801,243 $ 738,401 $ 665,887 $ 801,500 $ 726,450

Year-over-year growth 127 % 32 % (12 ) % 6 % (9 ) %

Year-over-year growth, excluding FX⁽⁵⁾ 138 % 45 % (4 ) % 9 % (8 ) %

% of Consolidated Gross Billings 59 % 57 % 55 % 53 % 52 %

Gross Billings TTM $ 2,871,795 $ 3,050,937 $ 2,960,592 $ 3,007,031 $ 2,932,238

Revenue

Local Revenue

Third Party and Other $ 213,166 $ 193,861 $ 164,184 $ 144,834 $ 155,800

Direct - - - - -

Total Local Revenue $ 213,166 $ 193,861 $ 164,184 $ 144,834 $ 155,800

Goods Revenue

Third Party and Other $ 60,365 $ 67,864 $ 71,310 $ 74,702 $ 63,937

Direct 7,396 12,288 11,930 15,600 14,229

Total Goods Revenue $ 67,761 $ 80,152 $ 83,240 $ 90,302 $ 78,166

Travel and Other Revenue

Third Party and Other $ 35,538 $ 34,141 $ 29,525 $ 27,815 $ 27,882

Direct 4,253 - - - -

Total Travel and Other Revenue $ 39,791 $ 34,141 $ 29,525 $ 27,815 $ 27,882

Total Revenue

Third Party and Other $ 309,069 $ 295,866 $ 265,019 $ 247,351 $ 247,619

Direct 11,649 12,288 11,930 15,600 14,229

Total Revenue $ 320,718 $ 308,154 $ 276,949 $ 262,951 $ 261,848

Year-over-year growth 102 % 31 % 3 % (16 ) % (18 ) %

Year-over-year growth, excluding FX 112 % 44 % 13 % (14 ) % (17 ) %

% of Consolidated Revenue 57 % 54 % 49 % 41 % 44 %

Revenue TTM $ 1,137,257 $ 1,210,034 $ 1,218,347 $ 1,168,772 $ 1,109,902

Cost of Revenue

Local Cost of Revenue

Third Party and Other $ 27,622 $ 24,162 $ 23,729 $ 20,423 $ 20,115

Direct - - - - -

Total Local Cost of Revenue $ 27,622 $ 24,162 $ 23,729 $ 20,423 $ 20,115

Goods Cost of Revenue

Third Party and Other $ 7,822 $ 8,459 $ 10,702 $ 12,558 $ 17,381

Direct 6,474 11,993 12,053 21,778 14,099

Total Goods Cost of Revenue $ 14,296 $ 20,452 $ 22,755 $ 34,336 $ 31,480

Travel and Other Cost of Revenue

Third Party and Other $ 4,605 $ 4,256 $ 4,267 $ 3,922 $ 3,600

Direct 3,724 - - - -

Total Travel and Other Cost of Revenue $ 8,329 $ 4,256 $ 4,267 $ 3,922 $ 3,600

Total Cost of Revenue

Third Party and Other $ 40,049 $ 36,877 $ 38,698 $ 36,903 $ 41,096

Direct 10,198 11,993 12,053 21,778 14,099

Total Cost of Revenue $ 50,247 $ 48,870 $ 50,751 $ 58,681 $ 55,195

% of International Total Revenue 16 % 16 % 18 % 22 % 21 %

Gross Profit

Local Gross Profit

Third Party and Other $ 185,544 $ 169,699 $ 140,455 $ 124,411 $ 135,685

Direct - - - - -

Total Local Gross Profit $ 185,544 $ 169,699 $ 140,455 $ 124,411 $ 135,685

% of International Total Local Revenue 87.0 % % 87.5 % % 85.5 % % 85.9 % % 87.1 % %

% of International Total Local Gross Billings 39.8 % % 40.1 % % 42.8 % % 33.7 % % 35.8 % %

Goods Gross Profit

Third Party and Other $ 52,543 $ 59,405 $ 60,608 $ 62,144 $ 46,556

Direct 922 295 (123 ) (6,178 ) 130

Total Goods Gross Profit $ 53,465 $ 59,700 $ 60,485 $ 55,966 $ 46,686

% of International Total Goods Revenue 78.9 % % 74.5 % % 72.7 % % 62.0 % % 59.7 % %

% of International Total Goods Gross Billings 25.8 % % 30.0 % % 27.1 % % 18.6 % % 20.6 % %

Travel and Other Gross Profit

Third Party and Other $ 30,933 $ 29,885 $ 25,258 $ 23,893 $ 24,282

Direct 529 - - - -

Total Travel and Other Gross Profit $ 31,462 $ 29,885 $ 25,258 $ 23,893 $ 24,282

% of International Total Travel and Other Revenue 79.1 % % 87.5 % % 85.5 % % 85.9 % % 87.1 % %

% of International Total Travel and Other Gross Billings 24.6 % % 25.8 % % 22.1 % % 18.1 % % 20.2 % %

Total Gross Profit

Third Party and Other $ 269,020 $ 258,989 $ 226,321 $ 210,448 $ 206,523

Direct 1,451 295 (123 ) (6,178 ) 130

Total Gross Profit $ 270,471 $ 259,284 $ 226,198 $ 204,270 $ 206,653

% of International Total Revenue 84.3 % % 84.1 % % 81.7 % % 77.7 % % 78.9 % %

% of International Total Gross Billings 33.8 % % 35.1 % % 34.0 % % 25.5 % % 28.4 % %

Operating Income (Loss) Excl SBC, Acq-Related $ 27,418 $ 28,505 $ 11,395 $ (3,329 ) $ 9,787

Year-over-year growth N/A 155 N/A (1,060 ) % (64 ) %

% of Consolidated Operating Income Excl SBC, Acq-Related 41 % 40 % 23 % (24 ) % 19 %

Operating Margin Excl SBC, Acq-Related (% of International Total revenue) 8.5 % 9.3 % 4.1 % (1.3 ) % 3.7 %

Year-over-year growth (bps) 5,669 3,126 1,170 (120 ) (480 )

Operating (Loss) Income TTM Excl SBC, Acq-Related $ (45,205 ) $ 35,108 $ 67,031 $ 63,989 $ 46,358

Operating Margin TTM Excl SBC, Acq-Related (% of International Total TTM revenue) (4.0 ) % 2.9 % 5.5 % 5.5 % 4.2 %

Year-over-year growth (bps) 8,704 5,765 4,170 2,080 820

Consolidated Results of Operations Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

Gross Billings

Local Gross Billings

Third Party and Other $ 890,003 $ 835,661 $ 677,337 $ 799,153 $ 829,533

Direct 5,299 288 6,450 - -

Total Local Gross Billings $ 895,302 $ 835,949 $ 683,787 $ 799,153 $ 829,533

Goods Gross Billings

Third Party and Other $ 275,896 $ 227,072 $ 236,972 $ 316,327 $ 230,030

Direct 9,678 65,061 138,538 225,176 162,294

Total Goods Gross Billings $ 285,574 $ 292,133 $ 375,510 $ 541,503 $ 392,324

Travel and Other Gross Billings

Third Party and Other $ 169,671 $ 158,594 $ 158,959 $ 179,796 $ 185,892

Direct 4,253 - - - -

Total Travel and Other Gross Billings $ 173,924 $ 158,594 $ 158,959 $ 179,796 $ 185,892

Total Gross Billings

Third Party and Other $ 1,335,570 $ 1,221,327 $ 1,073,268 $ 1,295,276 $ 1,245,475

Direct 19,230 65,349 144,988 225,176 162,294

Total Gross Billings $ 1,354,800 $ 1,286,676 $ 1,218,256 $ 1,520,452 $ 1,407,769

Year-over-year growth 103 % 38 % 5 % 24 % 4 %

Year-over-year growth, excluding FX 108 % 47 % 11 % 25 % 5 %

Gross Billings (TTM) $ 4,672,127 $ 5,029,554 $ 5,090,600 $ 5,380,184 $ 5,433,153

Year-over-year growth 241 % 128 % 61 % 35 % 16 %

Revenue

Local Revenue

Third Party and Other $ 404,294 $ 378,050 $ 299,177 $ 287,288 $ 327,393

Direct 5,299 288 6,450 - -

Total Local Revenue $ 409,593 $ 378,338 $ 305,627 $ 287,288 $ 327,393

Goods Revenue

Third Party and Other $ 85,306 $ 78,251 $ 84,374 $ 86,579 $ 67,081

Direct 9,678 65,062 138,538 225,175 162,294

Total Goods Revenue $ 94,984 $ 143,313 $ 222,912 $ 311,754 $ 229,375

Travel and Other Revenue

Third Party and Other $ 50,453 $ 46,684 $ 40,013 $ 39,260 $ 44,634

Direct 4,253 - - - -

Total Travel and Other Revenue $ 54,706 $ 46,684 $ 40,013 $ 39,260 $ 44,634

Total Revenue

Third Party and Other $ 540,053 $ 502,985 $ 423,564 $ 413,127 $ 439,108

Direct 19,230 65,350 144,988 225,175 162,294

Total Revenue $ 559,283 $ 568,335 $ 568,552 $ 638,302 $ 601,402

Year-over-year growth 89 % 45 % 32 % 30 % 8 %

Year-over-year growth, excluding FX 95 % 53 % 38 % 31 % 8 %

Total Consolidated Revenue TTM $ 1,874,190 $ 2,049,943 $ 2,188,334 $ 2,334,472 $ 2,376,591

Year-over-year growth 219 % 118 % 70 % 45 % 27 %

Cost of Revenue

Local Cost of Revenue

Third Party and Other $ 79,404 $ 59,872 $ 36,905 $ 43,626 $ 46,030

Direct 4,663 234 5,231 - -

Total Local Cost of Revenue $ 84,067 $ 60,106 $ 42,136 $ 43,626 $ 46,030

Goods Cost of Revenue

Third Party and Other $ 14,579 $ 10,473 $ 11,977 $ 14,493 $ 17,856

Direct 8,482 57,918 122,382 218,567 152,377

Total Goods Cost of Revenue $ 23,061 $ 68,391 $ 134,359 $ 233,060 $ 170,233

Travel and Other Cost of Revenue

Third Party and Other $ 8,646 $ 6,687 $ 5,291 $ 5,786 $ 6,130

Direct 3,724 - - - -

Total Travel and Other Cost of Revenue $ 12,370 $ 6,687 $ 5,291 $ 5,786 $ 6,130

Total Cost of Revenue

Third Party and Other $ 102,629 $ 77,032 $ 54,173 $ 63,905 $ 70,016

Direct 16,869 58,152 127,613 218,567 152,377

Total Cost of Revenue $ 119,498 $ 135,184 $ 181,786 $ 282,472 $ 222,393

% of Total Consolidated Revenue 21 % 24 % 32 % 44 % 37 %

Gross Profit

Local Gross Profit

Third Party and Other $ 324,890 $ 318,178 $ 262,272 $ 243,662 $ 281,363

Direct 636 54 1,219 - -

Total Local Gross Profit $ 325,526 $ 318,232 $ 263,491 $ 243,662 $ 281,363

% of Total Consolidated Local Revenue 79.5 % % 84.1 % % 86.2 % % 84.8 % % 85.9 % %

% of Total Consolidated Local Gross Billings 36.4 % % 38.1 % % 38.5 % % 30.5 % % 33.9 % %

Goods Gross Profit

Third Party and Other $ 70,727 $ 67,778 $ 72,397 $ 72,086 $ 49,225

Direct 1,196 7,144 16,156 6,608 9,917

Total Goods Gross Profit $ 71,923 $ 74,922 $ 88,553 $ 78,694 $ 59,142

% of Total Consolidated Goods Revenue 75.7 % % 52.3 % % 39.7 % % 25.2 % % 25.8 % %

% of Total Consolidated Goods Gross Billings 25.2 % % 25.6 % % 23.6 % % 14.5 % % 15.1 % %

Travel and Other Gross Profit

Third Party and Other $ 41,807 $ 39,997 $ 34,722 $ 33,474 $ 38,504

Direct 529 - - - -

Total Travel and Other Gross Profit $ 42,336 $ 39,997 $ 34,722 $ 33,474 $ 38,504

% of Total Consolidated Travel and Other Revenue 77.4 % % 85.7 % % 86.8 % % 85.3 % % 86.3 % %

% of Total Consolidated Travel and Other Gross Billings 24.3 % % 25.2 % % 21.8 % % 18.6 % % 20.7 % %

Total Gross Profit

Third Party and Other $ 437,424 $ 425,953 $ 369,391 $ 349,222 $ 369,092

Direct 2,361 7,198 17,375 6,608 9,917

Total Gross Profit $ 439,785 $ 433,151 $ 386,766 $ 355,830 $ 379,009

% of Total Consolidated Revenue 78.6 % % 76.2 % % 68.0 % % 55.7 % % 63.0 % %

% of Total Consolidated Gross Billings 32.5 % % 33.7 % % 31.7 % % 23.4 % % 26.9 % %

Operating Income Excl SBC, Acq-Related $ 67,590 $ 71,934 $ 50,488 $ 13,703 $ 51,153

Year-over-year growth N/A N/A N/A (24 ) % (24 ) %

Operating Margin Excl SBC, Acq-Related (% of Total Consolidated revenue) 12.1 % 12.7 % 8.9 % 2.1 % 8.5 %

Year-over-year growth (bps) 4,534 2,853 930 (150 ) (360 )

Operating Income TTM Excl SBC, Acq-Related $ 21,541 $ 155,784 $ 207,964 $ 203,715 $ 187,278

Operating Margin TTM Excl SBC, Acq-Related (% of Total Consolidated TTM revenue) 1.1 % 7.6 % 9.5 % 8.7 % 7.9 %

Year-over-year growth (bps) 5,011 4,229 3,320 1,770 680

Operating Income (Loss) $ 39,639 $ 46,485 $ 25,438 $ (12,861 ) $ 21,178

Year-over-year growth N/A N/A N/A 14 % (47 ) %

Operating Margin (% of Total Consolidated revenue) 7.1 % 8.2 % 4.5 % (2.0 ) % 3.5 %

Year-over-year growth (bps) 4,673 3,391 457 100 (360 )

Operating (Loss) Income TTM $ (76,599 ) $ 70,913 $ 96,590 $ 98,701 $ 80,240

Operating Margin TTM (% of Total Consolidated TTM revenue) (4.1 ) % 3.5 % 4.4 % 4.2 % 3.4 %

Year-over-year growth (bps) 8,875 6,824 4,740 1,870 750

Net (Loss) Income Attributable to Common Stockholders (11,695 ) 28,386 (2,979 ) (81,089 ) (3,992 )

Weighted Average Basic Shares Outstanding 644,097 647,150 653,224 655,678 658,800

Weighted Average Diluted Shares Outstanding ⁽⁶⁾ 644,097 663,123 653,224 655,678 658,800

Net (Loss) Earnings per Share

Basic $ (0.02 ) $ 0.04 $ (0.00 ) $ (0.12 ) $ (0.01 )

Diluted $ (0.02 ) $ 0.04 $ (0.00 ) $ (0.12 ) $ (0.01 )

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013

The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net (loss) income” and a quarterly reconciliation of operating income, excluding stock-based compensation and acquisition-related benefit (expense), net, to the most comparable U.S. GAAP financial measure, “Operating income (loss).” ⁽⁷⁾

Adjusted EBITDA $ 79,306 $ 84,744 $ 65,798 $ 29,668 $ 71,853

Depreciation and amortization (11,716 ) (12,810 ) (15,310 ) (15,965 ) (20,700 )

Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net 67,590 71,934 50,488 13,703 51,153

Stock-based compensation (28,003 ) (27,084 ) (22,619 ) (26,411 ) (29,907 )

Acquisition-related benefit (expense), net 52 1,635 (2,431 ) (153 ) (68 )

Operating income (loss) 39,639 46,485 25,438 (12,861 ) 21,178

Non Operating Items

Interest and other (expense) income, net (3,539 ) 57,367 617 (48,279 ) (5,064 )

Loss on equity method investments (5,128 ) (3,428 ) (138 ) (1,231 ) (19 )

Provision for income taxes (34,565 ) (66,875 ) (26,857 ) (17,676 ) (19,337 )

Net (loss) income $ (3,593 ) $ 33,549 $ (940 ) $ (80,047 ) $ (3,242 )

The following is a trailing twelve months reconciliation of Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net, to the most comparable U.S. GAAP financial measure, “Operating (loss) Income.” ⁽⁷⁾

Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net TTM $ 21,541 $ 155,784 $ 207,964 $ 203,715 $ 187,278

Stock-based compensation (102,729 ) (91,095 ) (110,374 ) (104,117 ) (106,021 )

Acquisition-related benefit (expense), net 4,589 6,224 (1,000 ) (897 ) (1,017 )

Operating (loss) income TTM $ (76,599 ) $ 70,913 $ 96,590 $ 98,701 $ 80,240

The following is a quarterly reconciliation of foreign exchange rate neutral Gross Billings growth from the comparable quarterly periods of the prior year to reported Gross billings growth from the comparable quarterly periods of the prior year.⁽⁸⁾

International Gross Billings growth, excluding FX 138 % 45 % (4 ) % 9 % (8 ) %

FX Effect (11 ) % (13 ) % (8 ) % (3 ) % (1 ) %

International Gross Billings growth 127 % 32 % (12 ) % 6 % (9 ) %

Consolidated Gross Billings growth, excluding FX 108 % 47 % 11 % 25 % 5 %

FX Effect (5 ) % (9 ) % (6 ) % (1 ) % (1 ) %

Consolidated Gross Billings growth 103 % 38 % 5 % 24 % 4 %

The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year.⁽⁸⁾

International Revenue growth, excluding FX 112 % 44 % 13 % (14 ) % (17 ) %

FX Effect (10 ) % (13 ) % (10 ) % (2 ) % (1 ) %

International Revenue growth 102 % 31 % 3 % (16 ) % (18 ) %

Consolidated Revenue growth, excluding FX 95 % 53 % 38 % 31 % 8 %

FX Effect (6 ) % (8 ) % (6 ) % (1 ) % - %

Consolidated Revenue growth 89 % 45 % 32 % 30 % 8 %

The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, “Net cash provided by operating activities.”

Net cash provided by operating activities $ 83,714 $ 75,315 $ 42,088 $ 65,717 $ 8,760

Purchases of property, equipment and capitalized software (13,083 ) (26,709 ) (16,010 ) (40,034 ) (14,468 )

Free cash flow ⁽⁹⁾ $ 70,631 $ 48,606 $ 26,078 $ 25,683 $ (5,708 )

Net cash provided by operating activities (TTM) $ 356,221 $ 392,517 $ 370,194 $ 266,834 $ 191,880

Purchases of property, equipment and capitalized software (TTM) (45,932 ) (62,401 ) (69,788 ) (95,836 ) (97,221 )

Free cash flow (TTM) $ 310,289 $ 330,116 $ 300,406 $ 170,998 $ 94,659

Net cash used in investing activities $ (46,444 ) $ (60,153 ) $ (35,629 ) $ (52,753 ) $ (30,679 )

Net cash (used in) provided by financing activities $ (8,275 ) $ 24,158 $ 2,707 $ (6,495 ) $ (9,432 )

Net cash used in investing activities (TTM) $ (149,583 ) $ (184,552 ) $ (177,133 ) $ (194,979 ) $ (179,214 )

Net cash provided by financing activities (TTM) $ 746,824 $ 771,404 $ 765,503 $ 12,095 $ 11,028

Other Metrics

Active Customers⁽¹⁰⁾

North America 14.9 15.1 16.0 17.2 18.2

International 22.0 22.9 23.5 23.8 23.5

Total Active Customers 36.9 38.0 39.5 41.0 41.7

TTM Gross Billings / Average Active Customer ⁽¹¹⁾

North America $ 156 $ 151 $ 148 $ 152 $ 151

International $ 197 $ 175 $ 149 $ 138 $ 129

Consolidated $ 179 $ 165 $ 149 $ 144 $ 138

Headcount

Sales ⁽¹²⁾ 5,735 5,587 5,087 4,677 4,566

% North America 21 % 20 % 24 % 25 % 28 %

% International 79 % 80 % 76 % 75 % 72 %

Other 6,813 7,233 6,779 6,717 6,433

Total Headcount 12,548 12,820 11,866 11,394 10,999

(1) Represents the total dollar value of customer purchases of goods and services, excluding applicable taxes and net of estimated refunds. Includes direct billings and third party and other billings.

(2) Local represents deals from local merchants, deals with national merchants, and through local events (i.e., GrouponLive deals).

(3) Third party revenue is related to sales for which the company acts as a marketing agent for the merchant. This revenue is recorded on a net basis. Direct revenue is primarily related to the sale of products for which the Company is the merchant of record. These revenues are accounted for on a gross basis, with the cost of inventory included in cost of revenue.

(4) Cost of revenue is comprised of direct and indirect costs incurred to generate revenue. Direct cost of revenue includes the purchase price of consumer products, warehousing, shipping costs and inventory markdowns. Third party cost of revenue includes estimated refunds for which the merchant’s share is not recoverable. Other costs incurred to generate revenue are allocated to cost of third party revenue, direct revenue and other revenue for each of our categories (Local, Goods, and Travel and Other) in proportion to relative gross billings during the period.

(5) Represents change in financial measures that would have resulted had average exchange rates in the reporting period been the same as those in effect in the prior year period.

(6) The weighted-average diluted shares outstanding is calculated using the weighted-average number of common shares and, if dilutive, potential common shares outstanding during the period. Potential common shares consist of the incremental common shares issuable upon the exercise of stock options and vesting of restricted stock units and restricted shares, as calculated using the treasury stock method.

(7) Adjusted EBITDA and Operating income excluding stock-based compensation and acquisition-related expense (benefit), net are non-GAAP financial measures. The Company reconciles Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net (loss) income” for the periods presented, and the Company reconciles Operating income excluding stock-based compensation and acquisition-related expense (benefit), net to the most comparable U.S. GAAP financial measure, “Operating income (loss),” for the periods presented.

(8) Foreign Exchange Rate neutral operating results are non-GAAP financial measures. The Company reconciles these measures to the most comparable U.S. GAAP financial measures, ‘‘Gross Billings” and “Revenue,” for the periods presented.

(9) Free cash flow is a non-GAAP financial measure. The Company reconciles this measure to the most comparable U.S. GAAP financial measure, ‘‘Net cash provided by operating activities,” for the periods presented.

(10) Reflects the total number of unique accounts who have purchased Groupons during the trailing twelve months.

(11) Reflects the total gross billings generated in the trailing twelve months per average active customer over that period.

(12) Includes inside and outside merchant sales representatives, as well as sales support.

(13) The definition, methodology, and appropriateness of each of our supplemental metrics is reviewed periodically. As a result, metrics are subject to removal and/or change.

LinkedIn Revenue Up 72%, Forecast Not So Great

Chris Crum — Thu, 02 May 2013 20:54:19 +0000

LinkedIn just reported its earnings for Q1, with revenue of $324.7 million for the quarter, up 72% year-over-year. Net income was $22.6 million, up from $5 million in the year-ago quarter.

CEO Jeff Weiner said, “Q1 was a strong quarter for LinkedIn with member engagement and financial results reaching record levels. We remained focused on delivering great products that increasingly make LinkedIn the essential daily resource for global professionals.”

Despite the revenue and earnings, LinkedIn stock is plummeting due to the company’s forecast, which didn’t meet Wall Street expectations.

Here’s the release in its entirety:

LinkedIn reports financial results for the first quarter ended March 31, 2013.

MOUNTAIN VIEW, Calif., May 2, 2013 – LinkedIn Corporation (NYSE: LNKD), the world’s largest professional network on the Internet, with more than 225 million members, reported its financial results for the first quarter of 2013:

Revenue for the first quarter was $324.7 million, an increase of 72% compared to $188.5 million in the first quarter of 2012.

Net income for the first quarter was $22.6 million, compared to net income of $5.0 million for the first quarter of 2012. Non-GAAP net income for the first quarter was $52.4 million, compared to $16.9 million for the first quarter of 2012. Non-GAAP measures exclude tax-affected stock-based compensation expense and tax-affected amortization of acquired intangible assets.

Adjusted EBITDA for the first quarter was $83.4 million, or 26% of revenue, compared to $38.1 million for the first quarter of 2012, or 20% of revenue.

GAAP diluted EPS for the first quarter was $0.20; Non-GAAP diluted EPS for the first quarter was $0.45.

“Q1 was a strong quarter for LinkedIn with member engagement and financial results reaching record levels,” said Jeff Weiner, CEO of LinkedIn. “We remained focused on delivering great products that increasingly make LinkedIn the essential daily resource for global professionals.”

First Quarter Financial Details and Operating Summary

Talent Solutions: Revenue from Talent Solutions products totaled $184.3 million, an increase of 80% compared to the first quarter of 2012. Talent Solutions revenue represented 57% of total revenue in the first quarter of 2013, compared to 54% in the first quarter of 2012.

Marketing Solutions: Revenue from Marketing Solutions products totaled $74.8 million, an increase of 56% compared to the first quarter of 2012. Marketing Solutions revenue represented 23% of total revenue in the first quarter of 2013, compared to 25% in the first quarter of 2012.

Premium Subscriptions: Revenue from Premium Subscriptions products totaled $65.6 million, an increase of 73% compared to the first quarter of 2012. Premium Subscriptions represented 20% of total revenue in the first quarter of 2013, consistent with the first quarter of 2012.

Revenue from the U.S. totaled $201.4 million, and represented 62% of total revenue in the first quarter of 2013. Revenue from international markets totaled $123.3 million, and represented 38% of total revenue in the first quarter of 2013.

Revenue from the field sales channel totaled $184.0 million, and represented 57% of total revenue in the first quarter of 2013. Revenue from the online, direct sales channel totaled $140.7 million, and represented 43% of total revenue in the first quarter of 2013.

GAAP net income for the first quarter was $22.6 million, compared to net income of $5.0 million for the first quarter of 2012. Non-GAAP net income for the first quarter was $52.4 million, compared to $16.9 million in the first quarter of 2012.

Adjusted EBITDA for the first quarter was $83.4 million, or 26% of revenue, compared to $38.1 million for the first quarter of 2012, or 20% of revenue.

GAAP diluted EPS was $0.20 based on 115.4 million fully-diluted weighted shares outstanding compared to $0.04 for the first quarter of 2012 based on 111.3 million fully-diluted weighted shares outstanding. Non-GAAP diluted EPS was $0.45 based on 115.4 million fully-diluted weighted shares outstanding compared to $0.15 for the first quarter of 2012 based on 111.3 million fully-diluted weighted shares outstanding.

“Our continued focus on our operating priorities yielded strong results in the first quarter, resulting in record levels of revenue, profitability, and cash flow,” said Steve Sordello, CFO of LinkedIn. “We remain encouraged by the diversity of our business and size of our market opportunities, and we will continue to invest aggressively to realize LinkedIn’s long-term potential.”

For additional information, please see the “Selected Company Metrics and Financials” page on LinkedIn’s Investor Relations site.

First Quarter Highlights and Strategic Announcements

In the first quarter of 2013, LinkedIn:

Grew its member base to 218 million, and witnessed strong member growth through the quarter due to optimization initiatives. As a result, new sign ups increased to greater than two per second.

Introduced a new version of search, which streamlines the experience and unifies results across multiple types of content including people, companies, and jobs. Early use indicates members have responded with increased search utilization.

Improved its content offering for professionals by adding a number of Influencers including Mayor Bloomberg, Meg Whitman, Jack Welch, Jeff Immelt, and Martha Stewart. LinkedIn continues to take steps to become the definitive professional publishing platform.

Additionally, LinkedIn launched several new products since the quarter end including a new version of its smartphone applications; Contacts, a new contact management system on the web and iOS mobile devices; as well products that enhance LinkedIn’s content ecosystem including the ability for member to include rich media in LinkedIn profiles, and content channels to follow 20 different professional topics on LinkedIn. In April, the company also launched a redesigned version of Recruiter, its flagship Talent Solutions product platform.

Business Outlook

LinkedIn is providing guidance for the second quarter and full year of 2013:

Q2 2013 Guidance: Revenue is expected to range between $342 million and $347 million. Adjusted EBITDA is expected to range between $77 million and $79 million. The company expects depreciation and amortization to be between $30 million and $32 million, and stock-based compensation to be between $49 million and $51 million.

Full Year 2013 Guidance: Revenue is revised upward by $20 million to range between $1.430 billion and $1.460 billion. Adjusted EBITDA is revised upward by $15 million to range between $330 million and $345 million. The company expects depreciation and amortization to be between $130 million and $135 million, and stock-based compensation to be between $190 million and $195 million.

Quarterly Conference Call

LinkedIn will host a webcast/conference call to discuss its first quarter 2013 financial results and business outlook today at 2:00 p.m. Pacific Time. Jeff Weiner and Steve Sordello will host the webcast, which can be viewed on the investor relations section of the LinkedIn website at

http://investors.linkedin.com/. This call will contain forward-looking statements and other material information regarding the company’s financial and operating results. Following completion of the call, a recorded replay of the webcast will be available on the website. For those without access to the Internet, a replay of the call will be available beginning at 8:00 p.m. Pacific Time on May 2, 2013 through May 9 2013 at 11:59 p.m. Pacific Time. To listen to the telephone replay, call (855) 859-2056 within the US or (404) 537-3406 Internationally, access code 34761898.

Upcoming Events

Management will participate in upcoming financial Q&A discussions at industry events on May 16^th and 29^th, as well as June 4^th and 13^th. LinkedIn will furnish a link to these events on its investor relations website, http://investors.linkedin.com/ for both the live and archived webcasts.

About LinkedIn

Founded in 2003, LinkedIn connects the world’s professionals to make them more productive and successful. With more than 225 million members worldwide, including executives from every Fortune 500 company, LinkedIn is the world’s largest professional network on the Internet. The company has a diversified business model with revenue coming from Talent Solutions, Marketing Solutions and Premium Subscriptions products. Headquartered in Silicon Valley, LinkedIn has offices across the globe.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, the company uses the following non-GAAP financial measures: adjusted EBITDA, non-GAAP net income, and non-GAAP diluted EPS (collectively the “non-GAAP financial measures”). The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. The company believes that they provide useful information about operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making.

The company excludes the following items from one or more of its non-GAAP measures:

Stock-based compensation. The company excludes stock-based compensation because it is non-cash in nature and because the company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. The company further believes this measure is useful to investors in that it allows for greater transparency to certain line items in its financial statements and facilitates comparisons to competitors’ operating results.

Amortization of acquired intangible assets. The company excludes amortization of acquired intangible assets because it is non-cash in nature and because the company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance and liquidity. In addition, excluding this item from various non-GAAP measures facilitates internal comparisons to historical operating results and comparisons to competitors’ operating results.

Income tax effect of non-GAAP adjustments. The company adjusts non-GAAP net income by including the income tax effects of excluding stock-based compensation and the amortization of acquired intangible assets. The company believes that the inclusion of the income tax effects provides additional transparency to the overall or “after tax” effects of excluding these items from non-GAAP net income.

For more information on the non-GAAP financial measures, please see the “Reconciliation of GAAP to non-GAAP Financial Measures” table in this press release. This accompanying table has more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures. Additionally, the company has not reconciled adjusted EBITDA guidance to net income guidance because it does not provide guidance for either other income (expense), net, or provision for income taxes, which are reconciling items between net income and adjusted EBITDA. As items that impact net income are out of the company’s control and/or cannot be reasonably predicted, the company is unable to provide such guidance. Accordingly, a reconciliation to net income is not available without unreasonable effort.

Safe Harbor Statement

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release and the accompanying conference call contain forward-looking statements about our products, including our investments in products, technology and other key strategic areas, certain non-financial metrics, such as member growth and engagement, and our expected financial metrics such as revenue, adjusted EBITDA, depreciation and amortization and stock-based compensation for the second quarter of 2013 and the full fiscal year 2013. The achievement of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements the company makes.

The risks and uncertainties referred to above include – but are not limited to – risks associated with: our limited operating history in a new and unproven market; engagement of our members; the price volatility of our Class A common stock; general economic conditions; expectations regarding the return on our strategic investments; execution of our plans and strategies, including with respect to mobile products and features; security measures and the risk that they may not be sufficient to secure our member data adequately or that we are subject to attacks that degrade or deny the ability of members to access our solutions; expectations regarding our ability to timely and effectively scale and adapt existing technology and network infrastructure to ensure that our solutions are accessible at all times with short or no perceptible load times; our ability to maintain our rate of revenue growth and manage our expenses and investment plans; our ability to accurately track our key metrics internally; members and customers curtailing or ceasing to use our solutions; our core value of putting members first, which may conflict with the short-term interests of the business; privacy and changes in regulations in the United States, Europe or elsewhere, which could impact our ability to serve our members or curtail our monetization efforts; litigation and regulatory issues; increasing competition; our ability to manage our growth; our ability to recruit and retain our employees; the application of US and international tax laws on our tax structure and any changes to such tax laws; acquisitions we have made or may make in the future; and the dual class structure of our common stock.

Further information on these and other factors that could affect the company’s financial results is included in filings it makes with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the company’s Annual Report on Form 10-K that was filed for the year ended December 31, 2012, and additional information will also be set forth in our Form 10-Q that will be filed for the quarter ended March 31, 2013, which should be read in conjunction with these financial results. These documents are or will be available on the SEC Filings section of the Investor Relations page of the company’s website athttp://investors.linkedin.com/. All information provided in this release and in the attachments is as of May 2, 2013, and LinkedIn undertakes no duty to update this information.

Instagram Will Probably Hold Off on the Ads for Now, But It’s Not for Lack of Interest

Josh Wolford — Thu, 02 May 2013 12:56:59 +0000

Facebook CEO Mark Zuckerberg briefly discussed Instagram at yesterday’s Q1 earnings call, and the takeaway is that big brands want more commercialization, but the Facebook-owned company is content with a growth strategy at the time being. That means no ads on Instagram…for now.

“They’re really doing well and growing quickly and that is the right focus for them,” Zuckerberg said. “They have the opportunity to…build community. I am really optimistic about the business and the opportunities.”

He went on to say that the addition of ads could possibly hamper Instagram’s growth. Instagram just surpassed 100 million monthly active users, and the photo-sharing app is growing at a faster rate than Facebook did at this time in its life.

According to Zuckerberg, it’s not that Instagram isn’t drawing any interest from businesses looking to advertise. “Big brands are approaching us,” he said.

You may remember that Facebook has to tread carefully when approaching the topic of ads on Instagram. Last year, Instagram users were up in arms over some proposed changes to the Instagram privacy policy. Originally, the company wanted to add this clause to the terms:

Some or all of the Service may be supported by advertising revenue. To help us deliver interesting paid or sponsored content or promotions, you agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you.

This led to a mostly misguided outrage that Instagram was going to sell users’ photos. What did deserve outrage was Instagram’s tricky, vague, lawyerly language that attempted to describe a future ad product that didn’t yet exist.

Co-founder Kevin Systrom ended up apologizing, saying they were wrong to put the cart before the horse.

“Going forward, rather than obtain permission from you to introduce possible advertising products we have not yet developed, we are going to take the time to complete our plans, and then come back to our users and explain how we would like for our advertising business to work.”

Instagram will be properly monetized, it’s inevitable. Facebook has already put way too much into the acquisition and Instagram is already such a powerful social channel. But for now, at least, it looks like Zuck is fine to let it grow.

Facebook Accounting Chief David Spillane Is Out

Josh Wolford — Wed, 01 May 2013 20:56:17 +0000

Today, Facebook reported their Q1 2013 earnings. The company slightly beat revenue expectations with a total of $1.458 billion. In all, revenue was up 38% year-over-year, with ad revenue up 43%.

Alongside the earnings, Facebook also filed with the SEC, and in this filing they announced that their Chief Accounting Officer, David Spillane, would be leaving the company in a couple of weeks. There’s no stated reason for the move.

Spillane first told Facebook of his intent to depart on April 25th, and Facebook says that he will officially leave the company on May 10th. Jas Athwal, Facebook’s revenue controller since 2008, will take his place.

Spillane sold 256,000 shares of Facebook stock last November, and another 60,000 back in January of this year. That still leaves him with around 160,000 shares.

With today’s earnings, Facebook also updated their user stats. Monthly active users have increased to 1.11 billion as of the end of March, which is an increase of 23% year-over-year. Daily active users have also increased, to 665 million, up 26% year-over year.

More importantly, Facebook is growing rapidly when it comes to mobile. At the end of the quarter, mobile MAUs were 751 million, up a whopping 54% year-over-year.

To think about it another way, more than 68% of Facebook users access the site via mobile.

Facebook Revenue Up 38%, Ad Revenue Up 43%

Chris Crum — Wed, 01 May 2013 20:52:21 +0000

Facebook released its Q1 earnings report on Wednesday, including revenue of $1.46 billion, an increase of 38% year-over-year. Revenue from advertising was $1.25 billion (85% of total revenue), up 43% year-over-year. Mobile advertising accounted for 30% of advertising revenue for the quarter. Revenue from Payments and other fees was $213 million.

The obligatory Mark Zuckerberg quote is: “We’ve made a lot of progress in the first few months of the year. We have seen strong growth and engagement across our community and launched several exciting products.”

Facebook also dropped some new user numbers. Daily active users were 665 million on average for March, up 26% year-over-year. Monthly active users were 1.11 billion as of March 31, up 23% year-over-year. Finally, Mobile monthly active users were 751 million as of March 31, up 54% year-over-year.

Here’s the release in its entirety:

MENLO PARK, Calif., May 1, 2013 /PRNewswire/ – Facebook, Inc. (NASDAQ: FB) today reported financial results for the first quarter, which ended March 31, 2013.

“We’ve made a lot of progress in the first few months of the year,” said Mark Zuckerberg, Facebook founder and CEO. “We have seen strong growth and engagement across our community and launched several exciting products.”

First Quarter 2013 Financial Summary

In millions, except percentages and per share amounts Q1’12 Q1’13

Revenue $ 1,058 $ 1,458

Income from Operations

    GAAP $ 381 $ 373

    Non-GAAP $ 485 $ 563

Operating Margin

    GAAP 36% 26%

    Non-GAAP 46% 39%

Net Income

    GAAP $ 205 $ 219

    Non-GAAP $ 287 $ 312

Diluted Earnings per Share (EPS)

    GAAP $ 0.09 $ 0.09

    Non-GAAP $ 0.12 $ 0.12

First Quarter 2013 Operational Highlights

Daily active users (DAUs) were 665 million on average for March 2013, an increase of 26% year-over-year.

Monthly active users (MAUs) were 1.11 billion as of March 31, 2013, an increase of 23% year-over-year.

Mobile MAUs were 751 million as of March 31, 2013, an increase of 54% year-over-year.

Recent Business Highlights

Launched Facebook Home, a mobile experience for Android that puts people before apps and makes the phone a more social experience.

Instagram reached 100 million monthly active users in the first quarter of 2013.

Launched new advertising products such as Lookalike Audiences, Managed Custom Audiences, and Partner Categories, which help marketers improve their targeting capabilities on Facebook.

Continue to invest in our ad serving and measurement platforms:

Partnered with Datalogix, Epsilon, Acxiom, and BlueKai to enable marketers to incorporate off-Facebook purchasing data in order to deliver more relevant ads to users.

Enhanced ability to measure advertiser ROI on digital media across the internet through our acquisition of the Atlas Advertising Suite.

Appointed Susan D. Desmond-Hellmann, M.D., M.P.H., chancellor of the University of California, San Francisco (UCSF), to the company’s board of directors.

First Quarter 2013 Financial Highlights

Revenue — Revenue for the first quarter totaled $1.46 billion, an increase of 38%, compared with $1.06 billion in the first quarter of 2012.

Revenue from advertising was $1.25 billion, representing 85% of total revenue and a 43% increase from the same quarter last year.

Mobile advertising revenue represented approximately 30% of advertising revenue for the first quarter of 2013.

Payments and other fees revenue was $213 million for the first quarter of 2013.

Costs and expenses — First quarter GAAP costs and expenses were $1.08 billion, an increase of 60% from the first quarter of 2012, driven primarily by infrastructure expense and increased headcount. Non-GAAP costs and expenses were $895 million in the first quarter, up 56% compared to $573 million for the first quarter of 2012.

Income from operations — For the first quarter, GAAP income from operations was $373 million, down 2% from $381 million in the first quarter of 2012. Excluding share-based compensation and related payroll tax expenses, non-GAAP income from operations for the first quarter was $563 million, up 16% compared to $485 million for the first quarter of 2012.

Operating margin — GAAP operating margin was 26% for the first quarter of 2013, compared to 36% in the first quarter of 2012. Excluding share-based compensation and related payroll tax expenses, non-GAAP operating margin was 39% for the first quarter of 2013, compared to 46% for the first quarter of 2012.

Provision for income taxes — GAAP income tax expense for the first quarter of 2013 was $134 million, representing a 38% effective tax rate. Excluding share-based compensation expense and related payroll tax expenses, the non-GAAP effective tax rate would have been approximately 43%.

Net income and EPS — For the first quarter, GAAP net income was $219 million, up 7% compared to net income of $205 million for the first quarter of 2012. Excluding share-based compensation and related payroll tax expenses and income tax adjustments, non-GAAP net income for the first quarter of 2013 was $312 million, up 9% compared to $287 million for the first quarter of 2012. GAAP diluted EPS was $0.09 in the first quarter of 2013. Excluding share-based compensation and related payroll tax expenses and income tax adjustments, non-GAAP diluted EPS for the first quarter of 2013 was $0.12, essentially flat compared to the first quarter of 2012.

Capital expenditures — Capital expenditures for the quarter were $327 million, a 28% decrease from the first quarter of 2012. Additionally, $11 million of equipment was procured or financed through capital leases during the first quarter of 2013.

Cash and marketable securities — Cash and marketable securities were $9.5 billion at the end of the first quarter of 2013.

Webcast and Conference Call Information

Facebook will host a conference call to discuss the results at 2 p.m. PT / 5 p.m. ET today. The live webcast can be accessed at the Facebook Investor Relations website at investor.fb.com, along with the company’s earnings press release, financial tables and slide presentation.

Following the call, a replay will be available at the same website. A telephonic replay will be available for one week following the conference call at + 1 (404) 537-3406 or + 1 (855) 859-2056, conference ID 29615930.

About Facebook

Founded in 2004, Facebook’s mission is to give people the power to share and make the world more open and connected. People useFacebook to stay connected with friends and family, to discover what’s going on in the world, and to share and express what matters to them.

Contacts

Investors:
Deborah Crawford
investor@fb.com / investor.fb.com

Press:
Ashley Zandy
press@fb.com / newsroom.fb.com

Forward Looking Statements

This press release contains forward-looking statements regarding our business strategy and plans, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are only predictions and may differ materially from actual results due to a variety of factors including: our ability to retain or increase users and engagement levels, particularly mobile engagement; our ability to monetize our mobile products; risks associated with new product development and introduction; our ability to expand the Facebook Platform; competition; privacy concerns; security breaches; and our ability to manage growth and geographically-dispersed operations. These and other potential risks and uncertainties that could cause actual results to differ from the results predicted are more fully detailed under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the SEC on February 1, 2013, which is available on our Investor Relations website at investor.fb.com and on the SEC website atwww.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013. In addition, please note that the date of this press release is May 1, 2013, and any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of this date. We undertake no obligation to update these statements as a result of new information or future events.

Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: total revenue and advertising revenue excluding foreign exchange effect, non-GAAP costs and expenses, non-GAAP income from operations; non-GAAP net income; non-GAAP diluted shares; non-GAAP diluted earnings per share; non-GAAP operating margin; and non-GAAP effective tax rate. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. In particular, many of the adjustments to our GAAP financial measures reflect the exclusion of items, specifically share-based compensation expense and payroll tax related to share-based compensation expense and the related income tax effects, that are recurring and will be reflected in our financial results for the foreseeable future. In addition, these measures may be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures.

We believe these non-GAAP financial measures provide investors with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management in operating our business.

We exclude the following items from one or more of our non-GAAP financial measures:

Share-based compensation expense. We exclude share-based compensation expense because we believe that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. In particular, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, we believe that providing non-GAAP financial measures that exclude this expense allow investors the ability to make more meaningful comparisons between our operating results and those of other companies. Accordingly, we believe that excluding this expense provides investors and management with greater visibility to the underlying performance of our business operations, facilitates comparison of our results with other periods, and may also facilitate comparison with the results of other companies in our industry.

Payroll tax expense related to share-based compensation. We exclude payroll tax expense related to share-based compensation expense because, without excluding these tax expenses, investors would not see the full effect that excluding share-based compensation expense had on our operating results. These expenses are tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of vesting or exercise, which factors may vary from period to period independent of the operating performance of our business. Similar to share-based compensation expense, we believe that excluding this payroll tax expense provides investors and management with greater visibility to the underlying performance of our business operations and facilitates comparison with other periods as well as the results of other companies.

Income tax effect of share-based compensation and related payroll tax expenses. We believe excluding the income tax effect of non-GAAP adjustments assists investors and management in understanding the tax provision related to those adjustments and provides useful supplemental information regarding the underlying performance of our business operations.

Assumed preferred stock conversion. As a result of our initial public offering in May 2012, all outstanding shares of preferred stock were automatically converted into shares of Class B common stock. Consequently, non-GAAP diluted shares and earnings per share for the three months ended March 31, 2012 have been calculated assuming this conversion, which we believe facilitates comparison with prior periods.

Dilutive equity awards excluded from GAAP. In our calculation of non-GAAP weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders, we include unvested RSUs for the three months ended March 31, 2012, the number of which is substantial due to the terms of RSUs granted prior to 2011. We believe including these awards facilitates comparison between periods.

Foreign exchange effect on revenue. We translate current quarter revenue using prior year exchange rates, which we believe is a useful metric that facilitates comparison to our historical performance.

For more information on our non-GAAP financial measures and a reconciliation of such measures to the nearest GAAP measure, please see the “Reconciliation of Non-GAAP Results to Nearest GAAP Measures” table in this press release.

FACEBOOK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In millions, except for per share amounts)

(Unaudited)

Three Months Ended

March 31,

2012 2013

Revenue $ 1,058 $ 1,458

Costs and expenses:

Cost of revenue 277 413

Research and development 153 293

Marketing and sales 143 203

General and administrative 104 176

Total costs and expenses 677 1,085

Income from operations 381 373

Interest and other income (expense), net:

Interest expense (13) (15)

Other income (expense), net 14 (5)

Income before provision for income taxes 382 353

Provision for income taxes 177 134

Net income $ 205 $ 219

Less: Net income attributable to participating securities 68 2

Net income attributable to Class A and Class B common stockholders $ 137 $ 217

Earnings per share attributable to Class A and Class B

common stockholders:

Basic $ 0.10 $ 0.09

Diluted $ 0.09 $ 0.09

Weighted-average shares used to compute earnings per share

attributable to Class A and Class B common stockholders:

Basic 1,347 2,386

Diluted 1,527 2,499

Share-based compensation expense included in costs & expenses:

Cost of revenue $ 5 $ 8

Research and development 60 117

Marketing and sales 19 24

General and administrative 19 21

Total share-based compensation expense $ 103 $ 170

Payroll tax expenses related to share-based compensation included in costs & expenses:

Cost of revenue $ - $ 1

Research and development 1 11

Marketing and sales - 4

General and administrative - 4

Total payroll tax expenses related to share-based compensation $ 1 $ 20

FACEBOOK, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)

(Unaudited)

December 31, March 31,

2012 2013

Assets

Current assets:

Cash and cash equivalents $ 2,384 $ 2,325

Marketable securities 7,242 7,147

Accounts receivable 719 659

Income tax refundable 451

426

Prepaid expenses and other current assets 471 485

Total current assets 11,267 11,042

Property and equipment, net 2,391 2,533

Goodwill and intangible assets, net 1,388 1,501

Other assets 57 87

Total assets $ 15,103 $ 15,163

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable $ 65 $ 75

Platform partners payable 169 190

Accrued expenses and other current liabilities 423 430

Deferred revenue and deposits 30 30

Current portion of capital lease obligations 365 338

Total current liabilities 1,052 1,063

Capital lease obligations, less current portion 491 420

Long-term debt 1,500 1,500

Other liabilities 305 356

Total liabilities 3,348 3,339

Stockholders’ equity

Common stock and additional paid-in capital 10,094 9,961

Accumulated other comprehensive income (loss) 2 (15)

Retained earnings 1,659 1,878

Total stockholders’ equity 11,755 11,824

Total liabilities and stockholders’ equity $ 15,103 $ 15,163

FACEBOOK, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Three Months Ended

March 31,

2012 2013

Cash flows from operating activities

Net income $ 205 $ 219

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

Depreciation and amortization 110 241

Loss on write-off of equipment 1 9

Share-based compensation 103 170

Deferred income taxes (24) (7)

Tax benefit from share-based award activity 54 59

Excess tax benefit from share-based award activity (54) (62)

Changes in assets and liabilities:

Accounts receivable 65 54

Prepaid expenses and other current assets (33) (1)

Other assets (6) (36)

Accounts payable (3) 1

Platform partners payable 7 21

Accrued expenses and other current liabilities 2 (33)

Deferred revenue and deposits 3 -

Other liabilities 11 84

Net cash provided by operating activities 441 719

Cash flows from investing activities

Purchases of property and equipment (453) (327)

Purchases of marketable securities (876) (1,508)

Sales of marketable securities 69 699

Maturities of marketable securities 567 903

Investments in non-marketable equity securities (1) -

Acquisitions of businesses, net of cash acquired, and purchases of intangible assets (25) (99)

Changes in restricted cash and deposits (1) 6

Net cash used in investing activities (720) (326)

Cash flows from financing activities

Taxes paid related to net share settlement of equity awards - (405)

Proceeds from exercise of stock options 5 8

Proceeds from sale and lease-back transactions 62 -

Principal payments on capital lease obligations (71) (109)

Excess tax benefit from share-based award activity 54 62

Net cash provided by (used in) financing activities 50 (444)

Effect of exchange rate changes on cash and cash equivalents (1) (8)

Net decrease in cash and cash equivalents (230) (59)

Cash and cash equivalents at beginning of period 1,512 2,384

Cash and cash equivalents at end of period $ 1,282 $ 2,325

Supplemental cash flow data

Cash paid during the period for:

Interest $ 9 $ 12

Income taxes $ 174 $ 9

Non-cash investing and financing activities:

Net change in accounts payable and accrued expenses and other current liabilities related to property and equipment additions $ 110 $ 47

Property and equipment acquired under capital leases $ 38 $ 11

Fair value of shares issued related to acquisitions of businesses and other assets $ 6 $ 33

Reconciliation of Non-GAAP Results to Nearest GAAP Measures

(In millions, except for number of shares)

(Unaudited)

Three Months Ended

March 31,

2012 2013

GAAP revenue $ 1,058 $ 1,458

Foreign exchange effect on 2013 revenue using 2012 rates 4

Revenue excluding foreign exchange effect $ 1,462

GAAP revenue year-over-year change % 38%

Revenue excluding foreign exchange effect year-over-year change % 38%

GAAP advertising revenue $ 872 $ 1,245

Foreign exchange effect on 2013 advertising revenue using 2012 rates 3

Advertising revenue excluding foreign exchange effect $ 1,248

GAAP advertising revenue year-over-year change % 43%

Advertising revenue excluding foreign exchange effect year-over-year change % 43%

GAAP costs and expenses $ 677 $ 1,085

Share-based compensation expense (103) (170)

Payroll tax expenses related to share-based compensation (1) (20)

Non-GAAP costs and expenses $ 573 $ 895

GAAP income from operations $ 381 $ 373

Share-based compensation expense 103 170

Payroll tax expenses related to share-based compensation 1 20

Non-GAAP income from operations $ 485 $ 563

GAAP net income $ 205 $ 219

Share-based compensation expense 103 170

Payroll tax expenses related to share-based compensation 1 20

Income tax adjustments (22) (97)

Non-GAAP net income $ 287 $ 312

GAAP diluted shares 1,527 2,499

Assumed preferred stock conversion 546 -

Dilutive equity awards excluded from GAAP¹ 233 -

Non-GAAP diluted shares 2,306 2,499

GAAP diluted earnings per share $ 0.09 $ 0.09

Net income attributable to participating securities 0.04 -

Non-GAAP adjustments to net income 0.05 0.03

Non-GAAP adjustments to diluted shares (0.06) -

Non-GAAP diluted earnings per share $ 0.12 $ 0.12

GAAP operating margin 36% 26%

Share-based compensation expense 10% 12%

Payroll tax expenses related to share-based compensation 0% 1%

Non-GAAP operating margin 46% 39%

GAAP profit before tax $ 382 $ 353

GAAP provision for income taxes 177 134

GAAP effective tax rate 46% 38%

GAAP profit before tax $ 382 $ 353

Share-based compensation and related payroll tax expenses 104 190

Non-GAAP profit before tax $ 486 $ 543

Non-GAAP provision for income taxes 199 231

Non-GAAP effective tax rate 41% 43%

¹Gives effect to unvested RSUs in periods prior to our IPO for comparability

SOURCE Facebook

Amazon Sales Up 22% To $16.07 Billion For Q1, Profit Down

Chris Crum — Thu, 25 Apr 2013 20:37:13 +0000

Amazon reported its Q1 earnings today with sales up 22% to $16.07 billion.

Operating cash flow was up 39% year-over-year to $4.25 billion for the trailing twelve months. Free cash flow was down 85% to $177 million for the trailing twelve months. This includes purchases of corporate office space and property in Seattle. Operating income was down 6% to $181 million in the first quarter, compared with $192 million in first quarter of 2012. Net income decreased 37% to $82 million in the quarter.

Amazon is excited about its original content business moving forward.

CEO Jeff Bezos said, “Amazon Studios is working on a new way to greenlight TV shows. The pilots are out in the open where everyone can have a say. I have my personal picks and so do members of the Amazon Studios team, but the exciting thing about our approach is that our opinions don’t matter. Our customers will determine what goes into full-season production. We hope Amazon Originals can become yet another way for us to create value for Prime members.”

There is also talk of a pending Amazon ad network that would take on the likes of Google and Facebook, not to mention set-top boxes.

Stock is up in after hours trading.

Here’s the release in its entirety:

SEATTLE–(BUSINESS WIRE)–Apr. 25, 2013– Amazon.com, Inc. (NASDAQ:AMZN) today announced financial results for its first quarter ended March 31, 2013.

Operating cash flow increased 39% to $4.25 billion for the trailing twelve months, compared with $3.05 billion for the trailing twelve months ended March 31, 2012. Free cash flow decreased 85% to $177 million for the trailing twelve months, compared with $1.15 billion for the trailing twelve months ended March 31, 2012. Free cash flow for the trailing twelve months ended March 31, 2013includes fourth quarter 2012 cash outflows for purchases of corporate office space and property in Seattle, Washington, of $1.4 billion.

Common shares outstanding plus shares underlying stock-based awards totaled 471 million on March 31, 2013, compared with 464 million one year ago.

Net sales increased 22% to $16.07 billion in the first quarter, compared with $13.18 billion in first quarter 2012. Excluding the $302 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales grew 24% compared with first quarter 2012.

Operating income decreased 6% to $181 million in the first quarter, compared with $192 million in first quarter 2012. The unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter on operating income was $12 million.

Net income decreased 37% to $82 million in the first quarter, or $0.18 per diluted share, compared with $130 million, or $0.28 per diluted share, in first quarter 2012.

“Amazon Studios is working on a new way to greenlight TV shows. The pilots are out in the open where everyone can have a say,” saidJeff Bezos, founder and CEO of Amazon.com. “I have my personal picks and so do members of the Amazon Studios team, but the exciting thing about our approach is that our opinions don’t matter. Our customers will determine what goes into full-season production. We hope Amazon Originals can become yet another way for us to create value for Prime members.”

Highlights

Amazon.com expanded selection for Prime Instant Video, announcing new licensing agreements with A+E Networks, CBS Corporation, FX, PBS Distribution and Scripps Networks Interactive, bringing exclusive access to popular television series such as Downton Abbey, Justified and Under the Dome as well as shows from HGTV, DIY Network, Food Network, Cooking Channel and Travel Channel. Prime Instant Video now includes more than 38,000 movies and TV episodes that are available for Prime members to watch at no additional charge.

Amazon Studios, the original film and series production arm of Amazon.com, debuted 14 original comedy and kids pilots. The pilots, which feature stars such as John Goodman, Jeffrey Tambor and Bebe Neuwirth, are available exclusively atwww.amazonoriginals.com and on the Amazon Instant Video app for Kindle Fire HD, Kindle Fire, iPad, iPhone, iPod touch, Roku, Xbox 360, PlayStation 3, Wii and Wii U, as well as hundreds of other connected devices. Viewer feedback will help determine which pilots Amazon Studios will produce into full series.

Amazon expanded the popular Kindle Fire feature “X-Ray for Movies” to TV shows, bringing the power of IMDb directly to the most popular TV shows on Kindle Fire. With a single tap viewers can discover the names of actors and what they’ve been in, without even leaving the TV show.

Kindle Owners’ Lending Library has grown to over 300,000 books available to borrow for free as frequently as a book a month, including many titles exclusive to Amazon.

Amazon announced the launch of the Amazon MP3 store optimized specifically for Safari browser. For the first time ever, iPhone and iPod touch users can discover and buy digital music from Amazon’s 22 million song catalog. Amazon also announced its Cloud Player app for iPad and iPad mini, enabling customers to play or download music stored in Cloud Player to their device, play music that is already stored on their device, and manage or create playlists.

Amazon announced it has extended its popular AutoRip services to vinyl records. AutoRip provides customers with free MP3 versions of CDs and vinyl records they purchase from Amazon. Additionally, customers who have purchased AutoRip CDs or vinyl records at any time since Amazon first opened its Music Store in 1998 will find MP3 versions of those albums in their Cloud Player libraries – also automatically for free.

Amazon announced the launch of Kindle Fire HD 8.9” — the large-screen version of its best-selling tablet —for the U.K.,Germany, France, Italy, Spain and Japan. With the expansion of Kindle Fire HD 8.9” to Europe and Japan, Amazon also announced a lower price on Kindle Fire HD 8.9” in the U.S., with the Wi-Fi version starting at $269 and the 4G version starting at$399.

Amazon Publishing, the publishing arm of Amazon.com, announced that it will start paying authors their royalties monthly, 60 days in arrears — allowing authors to receive payment more frequently than the twice-a-year industry standard.

Amazon acquired Goodreads, a leading site for readers and book recommendations that helps people find and share books they love. Goodreads members can discover new books by seeing what their friends are reading or by using the Goodreads Book Recommendation Engine; share ratings and recommendations; track what they have read, and list what they want to read.

Amazon Web Services (AWS) announced the launch of Amazon Redshift, a fast and powerful, fully managed, petabyte-scale data warehouse service in the cloud for a fraction of the cost of a traditional data warehouse.

AWS launched AWS OpsWorks, an application management solution for the complete lifecycle of complex applications, including resource provisioning, configuration management, deployment, monitoring, and access control.

AWS announced Amazon Elastic Transcoder, a highly scalable service for transcoding video files between different digital media formats. Amazon Elastic Transcoder manages all aspects of the transcoding process transparently and automatically, providing scalability and performance by leveraging AWS services.

AWS announced AWS CloudHSM, a new service enabling customers to increase data security and meet compliance requirements by using dedicated Hardware Security Module (HSM) appliances within the AWS Cloud. The CloudHSM service allows customers to securely generate, store and manage cryptographic keys used for data encryption in a way that keys are accessible only by the customer.

AWS has lowered prices 31 times since it launched in 2006, including 7 price reductions so far in 2013.

Financial Guidance

The following forward-looking statements reflect Amazon.com’s expectations as of April 25, 2013. Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic conditions and consumer spending, world events, the rate of growth of the Internet and online commerce and the various factors detailed below.

Second Quarter 2013 Guidance

Net sales are expected to be between $14.5 billion and $16.2 billion, or to grow between 13% and 26% compared with second quarter 2012.

Operating income (loss) is expected to be between $(340) million and $10 million, compared to $107 million in the comparable prior year period.

This guidance includes approximately $340 million for stock-based compensation and amortization of intangible assets, and it assumes, among other things, that no additional business acquisitions, investments, or legal settlements are concluded and that there are no further revisions to stock-based compensation estimates.

A conference call will be webcast live today at 2 p.m. PT/5 p.m. ET, and will be available for at least three months atwww.amazon.com/ir. This call will contain forward-looking statements and other material information regarding the Company’s financial and operating results.

These forward-looking statements are inherently difficult to predict. Actual results could differ materially for a variety of reasons, including, in addition to the factors discussed above, the amount that Amazon.com invests in new business opportunities and the timing of those investments, the mix of products sold to customers, the mix of net sales derived from products as compared with services, the extent to which we owe income taxes, competition, management of growth, potential fluctuations in operating results, international growth and expansion, the outcomes of legal proceedings and claims, fulfillment and data center optimization, risks of inventory management, seasonality, the degree to which the Company enters into, maintains, and develops commercial agreements, acquisitions, and strategic transactions, and risks of fulfillment throughput and productivity. Other risks and uncertainties include, among others, risks related to new products, services, and technologies, system interruptions, government regulation and taxation, payments, and fraud. In addition, the current global economic climate amplifies many of these risks. More information about factors that potentially could affect Amazon.com’s financial results is included in Amazon.com’s filings with the Securities and Exchange Commission (“SEC”), including its most recent Annual Report on Form 10-K and subsequent filings.

Our investor relations website is www.amazon.com/ir and we encourage investors to use it as a way of easily finding information about us. We promptly make available on this website, free of charge, the reports that we file or furnish with the SEC, corporate governance information (including our Code of Business Conduct and Ethics), and select press releases and social media postings.

About Amazon.com

Amazon.com, Inc. (NASDAQ: AMZN), a Fortune 500 company based in Seattle, opened on the World Wide Web in July 1995 and today offers Earth’s Biggest Selection. Amazon.com, Inc. seeks to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and other sellers offer millions of unique new, refurbished and used items in categories such as Books; Movies, Music & Games; Digital Downloads; Electronics & Computers; Home & Garden; Toys, Kids & Baby; Grocery; Apparel, Shoes & Jewelry; Health & Beauty; Sports & Outdoors; and Tools, Auto & Industrial. Amazon Web Services provides Amazon’s developer customers with access to in-the-cloud infrastructure services based on Amazon’s own back-end technology platform, which developers can use to enable virtually any type of business. Kindle Paperwhite is the most-advanced e-reader ever constructed with 62% more pixels and 25% increased contrast, a patented built-in front light for reading in all lighting conditions, extra-long battery life, and a thin and light design. The new latest generation Kindle, the lightest and smallest Kindle, now features new, improved fonts and faster page turns. Kindle Fire HD features a stunning custom high-definition display, exclusive Dolby audio with dual stereo speakers, high-end, laptop-grade Wi-Fi with dual-band support, dual-antennas and MIMO for faster streaming and downloads, enough storage for HD content, and the latest generation processor and graphics engine—and it is available in two display sizes—7” and 8.9”. The large-screen Kindle Fire HD is also available with 4G wireless, and comes with a groundbreaking $49.99 introductory 4G LTE data package. The all-new Kindle Fire features a 20% faster processor, 40% faster performance, twice the memory, and longer battery life.

Amazon and its affiliates operate websites…. As used herein, “Amazon.com,” “we,” “our” and similar terms include Amazon.com, Inc., and its subsidiaries, unless the context indicates otherwise.

AMAZON.COM, INC.

Consolidated Statements of Cash Flows

(in millions)

(unaudited)

Three Months Ended Twelve Months Ended

March 31, March 31,

2013 2012 2013 2012

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 8,084 $ 5,269 $ 2,288 $ 2,641

OPERATING ACTIVITIES:

Net income (loss) 82 130 (87 ) 561

Adjustments to reconcile net income (loss) to net cash from operating activities:

Depreciation of property and equipment, including internal-use software and website development, and other amortization 700 457 2,402 1,338

Stock-based compensation 229 160 901 605

Other operating expense (income), net 31 46 139 168

Losses (gains) on sales of marketable securities, net - (2 ) (7 ) (8 )

Other expense (income), net 68 15 306 (78 )

Deferred income taxes (80 ) (38 ) (307 ) 83

Excess tax benefits from stock-based compensation - (40 ) (390 ) (56 )

Changes in operating assets and liabilities:

Inventories 535 747 (1,211 ) (1,374 )

Accounts receivable, net and other 729 746 (877 ) (479 )

Accounts payable (4,187 ) (4,258 ) 2,141 1,388

Accrued expenses and other (703 ) (529 ) 864 721

Additions to unearned revenue 684 397 2,083 1,252

Amortization of previously unearned revenue (460 ) (269 ) (1,712 ) (1,070 )

Net cash provided by (used in) operating activities (2,372 ) (2,438 ) 4,245 3,051

INVESTING ACTIVITIES:

Purchases of property and equipment, including internal-use software and website development (670 ) (386 ) (4,068 ) (1,899 )

Acquisitions, net of cash acquired, and other (103 ) (50 ) (798 ) (615 )

Sales and maturities of marketable securities and other investments 599 1,738 3,098 6,641

Purchases of marketable securities and other investments (776 ) (852 ) (3,227 ) (5,997 )

Net cash provided by (used in) investing activities (950 ) 450 (4,995 ) (1,870 )

FINANCING ACTIVITIES:

Excess tax benefits from stock-based compensation - 40 390 56

Common stock repurchased - (960 ) - (1,237 )

Proceeds from long-term debt and other 25 68 3,319 154

Repayments of long-term debt, capital lease, and finance lease obligations (182 ) (153 ) (603 ) (483 )

Net cash provided by (used in) financing activities (157 ) (1,005 ) 3,106 (1,510 )

Foreign-currency effect on cash and cash equivalents (124 ) 12 (163 ) (24 )

Net increase (decrease) in cash and cash equivalents (3,603 ) (2,981 ) 2,193 (353 )

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,481 $ 2,288 $ 4,481 $ 2,288

SUPPLEMENTAL CASH FLOW INFORMATION:

Cash paid for interest on long-term debt $ 13 $ 6 $ 37 $ 17

Cash paid for income taxes (net of refunds) 86 19 179 45

Property and equipment acquired under capital leases 340 149 993 721

Property and equipment acquired under build-to-suit leases 150 17 163 207

AMAZON.COM, INC.

Consolidated Statements of Operations

(in millions, except per share data)

(unaudited)

Three Months Ended

March 31,

2013 2012

Net product sales $ 13,271 $ 11,249

Net services sales 2,799 1,936

Total net sales 16,070 13,185

Operating expenses (1):

Cost of sales 11,801 10,027

Fulfillment 1,796 1,295

Marketing 632 480

Technology and content 1,383 945

General and administrative 246 200

Other operating expense (income), net 31 46

Total operating expenses 15,889 12,993

Income from operations 181 192

Interest income 10 12

Interest expense (33 ) (21 )

Other income (expense), net (77 ) (99 )

Total non-operating income (expense) (100 ) (108 )

Income before income taxes 81 84

Benefit (provision) for income taxes 18 (43 )

Equity-method investment activity, net of tax (17 ) 89

Net income $ 82 $ 130

Basic earnings per share $ 0.18 $ 0.29

Diluted earnings per share $ 0.18 $ 0.28

Weighted average shares used in computation of earnings per share:

Basic 455 453

Diluted 463 460

(1) Includes stock-based compensation as follows:

Fulfillment $ 61 $ 37

Marketing 16 12

Technology and content 120 85

General and administrative 32 26

AMAZON.COM, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions)

(unaudited)

Three Months Ended

March 31,

2013 2012

Net income $ 82 $ 130

Other comprehensive income (loss):

Foreign currency translation adjustments, net of tax of $(9) and $(38) (78 ) 137

Net change in unrealized gains on available-for-sale securities:

Unrealized gains (losses), net of tax of $1 and $(3) (2 ) 7

Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax effect of $0 and $1 - (2 )

Net unrealized gains (losses) on available-for-sale securities (2 ) 5

Total other comprehensive income (loss) (80 ) 142

Comprehensive income $ 2 $ 272

AMAZON.COM, INC.

Segment Information

(in millions)

(unaudited)

Three Months Ended

March 31,

2013 2012

North America

Net sales $ 9,391 $ 7,427

Segment operating expenses (1) 8,934 7,078

Segment operating income $ 457 $ 349

International

Net sales $ 6,679 $ 5,758

Segment operating expenses (1) 6,695 5,709

Segment operating income (loss) $ (16 ) $ 49

Consolidated

Net sales $ 16,070 $ 13,185

Segment operating expenses (1) 15,629 12,787

Segment operating income 441 398

Stock-based compensation (229 ) (160 )

Other operating income (expense), net (31 ) (46 )

Income from operations 181 192

Total non-operating income (expense) (100 ) (108 )

Benefit (provision) for income taxes 18 (43 )

Equity-method investment activity, net of tax (17 ) 89

Net income $ 82 $ 130

Segment Highlights:

Y/Y net sales growth:

North America 26 % 36 %

International 16 31

Consolidated 22 34

Y/Y segment operating income growth (decline):

North America 31 % 20 %

International (133 ) (72 )

Consolidated 11 (15 )

Net sales mix:

North America 58 % 56 %

International 42 44

100 % 100 %

(1) Represents operating expenses, excluding stock-based compensation and “Other operating expense (income), net,” which are not allocated to segments.

AMAZON.COM, INC.

Supplemental Net Sales Information

(in millions)

(unaudited)

Three Months Ended

March 31,

2013 2012

North America

Media $ 2,513 $ 2,197

Electronics and other general merchandise 6,128 4,772

Other (1) 750 458

Total North America $ 9,391 $ 7,427

International

Media $ 2,545 $ 2,513

Electronics and other general merchandise 4,086 3,203

Other (1) 48 42

Total International $ 6,679 $ 5,758

Consolidated

Media $ 5,058 $ 4,710

Electronics and other general merchandise 10,214 7,975

Other (1) 798 500

Total consolidated $ 16,070 $ 13,185

Y/Y Net Sales Growth:

North America:

Media 14 % 17 %

Electronics and other general merchandise 28 44

Other 64 66

Total North America 26 36

International:

Media 1 % 21 %

Electronics and other general merchandise 28 40

Other 14 24

Total International 16 31

Consolidated:

Media 7 % 19 %

Electronics and other general merchandise 28 43

Other 59 61

Total consolidated 22 34

Y/Y Net Sales Growth Excluding Effect of Exchange Rates:

International:

Media 7 % 22 %

Electronics and other general merchandise 32 42

Other 18 26

Total International 21 32

Consolidated:

Media 10 % 19 %

Electronics and other general merchandise 30 43

Other 60 61

Total consolidated 24 34

Consolidated Net Sales Mix:

Media 31 % 36 %

Electronics and other general merchandise 64 60

Other 5 4

100 % 100 %

(1) Includes sales from non-retail activities, such as AWS in the North America segment, advertising services, and our co-branded credit card agreements in both segments.

AMAZON.COM, INC.

Consolidated Balance Sheets

(in millions, except per share data)

March 31, December 31,

2013 2012

ASSETS (unaudited)

Current assets:

Cash and cash equivalents $ 4,481 $ 8,084

Marketable securities 3,414 3,364

Inventories 5,395 6,031

Accounts receivable, net and other 2,516 3,364

Deferred tax assets 507 453

Total current assets 16,313 21,296

Property and equipment, net 7,674 7,060

Deferred tax assets 123 123

Goodwill 2,535 2,552

Other assets 1,732 1,524

Total assets $ 28,377 $ 32,555

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable $ 8,916 $ 13,318

Accrued expenses and other 5,416 5,684

Total current liabilities 14,332 19,002

Long-term debt 3,040 3,084

Other long-term liabilities 2,573 2,277

Commitments and contingencies

Stockholders’ equity:

Preferred stock, $0.01 par value:

Authorized shares — 500

Issued and outstanding shares — none - -

Common stock, $0.01 par value:

Authorized shares — 5,000

Issued shares — 479 and 478

Outstanding shares — 455 and 454 5 5

Treasury stock, at cost (1,837 ) (1,837 )

Additional paid-in capital 8,585 8,347

Accumulated other comprehensive loss (319 ) (239 )

Retained earnings 1,998 1,916

Total stockholders’ equity 8,432 8,192

Total liabilities and stockholders’ equity $ 28,377 $ 32,555

AMAZON.COM, INC.

Supplemental Financial Information and Business Metrics

(in millions, except per share data)

(unaudited)

Y/Y %

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Change

Cash Flows and Shares

Operating cash flow — trailing twelve months (TTM) $ 3,051 $ 3,222 $ 3,368 $ 4,180 $ 4,245 39 %

Purchases of property and equipment (incl. internal-use software & website development) — TTM $ 1,899 $ 2,123 $ 2,310 $ 3,785 $ 4,068 114 %

Free cash flow (operating cash flow less purchases of property and equipment) — TTM $ 1,152 $ 1,099 $ 1,058 $ 395 $ 177 (85 %)

Free cash flow — TTM Y/Y growth (decline) (39 %) (40 %) (31 %) (81 %) (85 %) N/A

Invested capital (1) $ 10,006 $ 10,250 $ 10,392 $ 11,181 $ 12,019 20 %

Return on invested capital (2) 12 % 11 % 10 % 4 % 1 % N/A

Common shares and stock-based awards outstanding 464 468 469 470 471 2 %

Common shares outstanding 450 452 453 454 455 1 %

Stock-based awards outstanding 13 16 16 16 16 17 %

Stock-based awards outstanding — % of common shares outstanding 2.9 % 3.6 % 3.6 % 3.5 % 3.4 % N/A

Results of Operations

Worldwide (WW) net sales $ 13,185 $ 12,834 $ 13,806 $ 21,268 $ 16,070 22 %

WW net sales — Y/Y growth, excluding F/X 34 % 32 % 30 % 23 % 24 % N/A

WW net sales — TTM $ 51,404 $ 54,325 $ 57,256 $ 61,093 $ 63,978 24 %

WW net sales — TTM Y/Y growth, excluding F/X 37 % 35 % 33 % 29 % 27 % N/A

Operating income (loss) $ 192 $ 107 $ (28 ) $ 405 $ 181 (6 %)

Operating income — Y/Y growth (decline), excluding F/X (38 %) (34 %) (137 %) 59 % 1 % N/A

Operating margin — % of WW net sales 1.5 % 0.8 % (0.2 %) 1.9 % 1.1 % N/A

Operating income — TTM $ 732 $ 637 $ 531 $ 676 $ 665 (9 %)

Operating income — TTM Y/Y growth (decline), excluding F/X (50 %) (50 %) (48 %) (15 %) (6 %) N/A

Operating margin — TTM % of WW net sales 1.4 % 1.2 % 0.9 % 1.1 % 1.0 % N/A

Net income (loss) $ 130 $ 7 $ (274 ) $ 97 $ 82 (37 %)

Net income (loss) per diluted share $ 0.28 $ 0.01 $ (0.60 ) $ 0.21 $ 0.18 (37 %)

Net income (loss) — TTM $ 561 $ 377 $ 40 $ (39 ) $ (87 ) (116 %)

Net income (loss) per diluted share — TTM $ 1.22 $ 0.82 $ 0.09 $ (0.09 ) $ (0.19 ) (116 %)

Segments

North America Segment:

Net sales $ 7,427 $ 7,326 $ 7,884 $ 12,175 $ 9,391 26 %

Net sales — Y/Y growth, excluding F/X 36 % 36 % 33 % 23 % 26 % N/A

Net sales — TTM $ 28,667 $ 30,587 $ 32,540 $ 34,813 $ 36,777 28 %

Operating income $ 349 $ 344 $ 291 $ 608 $ 457 31 %

Operating margin — % of North America net sales 4.7 % 4.7 % 3.7 % 5.0 % 4.9 % N/A

Operating income — TTM $ 991 $ 1,120 $ 1,268 $ 1,592 $ 1,700 72 %

Operating income — TTM Y/Y growth, excluding F/X 2 % 14 % 34 % 71 % 72 % N/A

Operating margin — TTM % of North America net sales 3.5 % 3.7 % 3.9 % 4.6 % 4.6 % N/A

International Segment:

Net sales $ 5,758 $ 5,508 $ 5,922 $ 9,093 $ 6,679 16 %

Net sales — Y/Y growth, excluding F/X 32 % 28 % 27 % 23 % 21 % N/A

Net sales — TTM $ 22,737 $ 23,738 $ 24,716 $ 26,280 $ 27,201 20 %

Net sales — TTM % of WW net sales 44 % 44 % 43 % 43 % 43 % N/A

Operating income (loss) $ 49 $ 16 $ (59 ) $ 70 $ (16 ) (133 %)

Operating margin — % of International net sales 0.9 % 0.3 % (1.0 %) 0.8 % (0.2 %) N/A

Operating income — TTM $ 515 $ 359 $ 183 $ 76 $ 11 (98 %)

Operating income — TTM Y/Y growth (decline), excluding F/X (49 %) (57 %) (68 %) (77 %) (83 %) N/A

Operating margin — TTM % of International net sales 2.3 % 1.5 % 0.7 % 0.3 % 0.0 % N/A

Consolidated Segments:

Operating expenses (3) $ 12,787 $ 12,474 $ 13,574 $ 20,590 $ 15,629 22 %

Operating expenses — TTM (3) $ 49,899 $ 52,846 $ 55,805 $ 59,425 $ 62,267 25 %

Operating income $ 398 $ 360 $ 232 $ 678 $ 441 11 %

Operating margin — % of Consolidated sales 3.0 % 2.8 % 1.7 % 3.2 % 2.7 % N/A

Operating income — TTM $ 1,505 $ 1,480 $ 1,451 $ 1,668 $ 1,711 14 %

Operating income — TTM Y/Y growth (decline), excluding F/X (22 %) (21 %) (15 %) 7 % 15 % N/A

Operating margin — TTM % of Consolidated net sales 2.9 % 2.7 % 2.5 % 2.7 % 2.7 % N/A

AMAZON.COM, INC.

Supplemental Financial Information and Business Metrics

(in millions, except inventory turnover, accounts payable days and employee data)

(unaudited)

Y/Y %

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Change

Supplemental

Supplemental North America Segment Net Sales:

Media $ 2,197 $ 1,874 $ 2,215 $ 2,903 $ 2,513 14 %

Media — Y/Y growth, excluding F/X 17 % 18 % 15 % 13 % 14 % N/A

Media — TTM $ 8,270 $ 8,559 $ 8,847 $ 9,189 $ 9,506 15 %

Electronics and other general merchandise $ 4,772 $ 4,937 $ 5,061 $ 8,503 $ 6,128 28 %

Electronics and other general merchandise — Y/Y growth, excluding F/X 44 % 41 % 39 % 24 % 28 % N/A

Electronics and other general merchandise — TTM $ 18,784 $ 20,226 $ 21,652 $ 23,273 $ 24,629 31 %

Electronics and other general merchandise — TTM % of North America net sales 66 % 66 % 67 % 67 % 67 % N/A

Other $ 458 $ 515 $ 608 $ 769 $ 750 64 %

Other — TTM $ 1,613 $ 1,802 $ 2,041 $ 2,351 $ 2,642 64 %

Supplemental International Segment Net Sales:

Media $ 2,513 $ 2,245 $ 2,385 $ 3,611 $ 2,545 1 %

Media — Y/Y growth, excluding F/X 22 % 12 % 12 % 7 % 7 % N/A

Media — TTM $ 10,261 $ 10,431 $ 10,590 $ 10,753 $ 10,785 5 %

Electronics and other general merchandise $ 3,203 $ 3,224 $ 3,497 $ 5,431 $ 4,086 28 %

Electronics and other general merchandise — Y/Y growth, excluding F/X 42 % 42 % 39 % 37 % 32 % N/A

Electronics and other general merchandise — TTM $ 12,314 $ 13,139 $ 13,956 $ 15,355 $ 16,238 32 %

Electronics and other general merchandise — TTM % of International net sales 54 % 55 % 56 % 58 % 60 % N/A

Other $ 42 $ 39 $ 40 $ 51 $ 48 14 %

Other — TTM $ 162 $ 168 $ 170 $ 172 $ 178 9 %

Supplemental Worldwide Net Sales:

Media $ 4,710 $ 4,119 $ 4,600 $ 6,514 $ 5,058 7 %

Media — Y/Y growth, excluding F/X 19 % 15 % 14 % 10 % 10 % N/A

Media — TTM $ 18,531 $ 18,990 $ 19,437 $ 19,942 $ 20,291 9 %

Electronics and other general merchandise $ 7,975 $ 8,161 $ 8,558 $ 13,934 $ 10,214 28 %

Electronics and other general merchandise — Y/Y growth, excluding F/X 43 % 42 % 39 % 29 % 30 % N/A

Electronics and other general merchandise — TTM $ 31,098 $ 33,365 $ 35,608 $ 38,628 $ 40,867 31 %

Electronics and other general merchandise — TTM % of WW net sales 60 % 61 % 62 % 63 % 64 % N/A

Other $ 500 $ 554 $ 648 $ 820 $ 798 59 %

Other — TTM $ 1,775 $ 1,970 $ 2,211 $ 2,523 $ 2,820 59 %

Balance Sheet

Cash and marketable securities $ 5,715 $ 4,970 $ 5,248 $ 11,448 $ 7,895 38 %

Inventory, net — ending $ 4,255 $ 4,380 $ 5,065 $ 6,031 $ 5,395 27 %

Inventory turnover, average — TTM 10.4 10.1 9.7 9.3 9.5 (8 %)

Property and equipment, net $ 4,653 $ 5,097 $ 5,662 $ 7,060 $ 7,674 65 %

Accounts payable — ending $ 6,886 $ 7,072 $ 8,369 $ 13,318 $ 8,916 29 %

Accounts payable days — ending 62 68 75 76 68 9 %

Other

WW shipping revenue $ 461 $ 469 $ 517 $ 832 $ 633 37 %

WW shipping costs $ 1,129 $ 1,054 $ 1,153 $ 1,798 $ 1,396 24 %

WW net shipping costs $ 668 $ 585 $ 636 $ 966 $ 763 14 %

WW net shipping costs — % of WW net sales 5.1 % 4.6 % 4.6 % 4.5 % 4.7 % N/A

Employees (full-time and part-time; excludes contractors & temporary personnel) 65,600 69,100 81,400 88,400 91,300 39 %

(1) Average Total Assets minus Current Liabilities (excluding current portion of Long-Term Debt) over five quarter ends.

(2) TTM Free Cash Flow divided by Invested Capital.

(3) Represents cost of sales, fulfillment, marketing, technology and content, and general and administrative operating expenses, excluding stock-based compensation.

Amazon.com, Inc.

Certain Definitions

Customer Accounts

References to customers mean customer accounts, which are unique e-mail addresses, established either when a customer places an order or when a customer orders from other sellers on our websites. Customer accounts exclude certain customers, including customers associated with certain of our acquisitions, Amazon Payments customers, Amazon Web Services customers, and the customers of select companies with whom we have a technology alliance or marketing and promotional relationship. Customers are considered active when they have placed an order during the preceding twelve-month period.

Seller Accounts

References to sellers means seller accounts, which are established when a seller receives an order from a customer account. Sellers are considered active when they have received an order from a customer during the preceding twelve-month period.

Registered Developers

References to registered developers mean cumulative registered developer accounts, which are established when potential developers enroll with Amazon Web Services and receive a developer access key.

Units

References to units mean physical and digital units sold (net of returns and cancellations) by us and sellers at Amazon domains worldwide – for example www.amazon.com, www.amazon.co.uk… – as well as Amazon-owned items sold through non-Amazon domains. Units sold are paid units and do not include units associated with certain acquisitions, rental businesses, web services or advertising businesses, or Amazon gift certificates.

Source: Amazon.com, Inc.

Netflix to Offer ‘Family’ Plan with 4 Simultaneous Streams for $12

Josh Wolford — Tue, 23 Apr 2013 12:55:26 +0000

Netflix will unveil a new tier to their subscription plans in the U.S., allowing large families to stream more content at the same time.

The company will soon give the option for subscribers to pay $11.99 a month in order to unlock 4 simultaneous streams. As of now, Netflix only allows for 2 simultaneous streams.

“A few members with large families run into our 2-simultaneous-stream limit. To best serve these
members, we’re shortly adding a 4-stream plan, at $11.99 in the U.S., and we expect fewer than 1% of
members to take it,” says Netflix.

They announced plans for the new option in their quarterly letter to shareholders.

Of course, this plan doesn’t have to be used by large families. It seems like a great option for roommates, or those living in college dorms. Netflix account sharing is ubiquitous, and the only impediment has always been that pesky limited simultaneous stream thing. Now, if you pay a few dollars extra, you can double the amount of simultaneous streams that can originate from a single account. Sure beats paying for another subscription.

It’s somewhat odd that Netflix only expects 1% to take advantage of it.

On Monday, Netflix announced revenues of $1.02 billion, slightly beating expectations. They also added 3 million new streaming customers, and can now boast 36 million worldwide.

Netflix: Very Few Gamed Free Trials to Watch House of Cards

Josh Wolford — Mon, 22 Apr 2013 20:41:03 +0000

Netflix just posted their Q1 2013 earnings – $1.02 billion total revenue, slightly beating expectations. They also added 3 million streaming customers, bringing the total to 36 million.

Inside the letter to investors, CEO Reed Hastings and CFO David Wells talk Netflix’s push toward original content – spearheaded by the Kevin Spacey-helmed David Fincher-produced political thriller House of Cards. And they drop a pretty interesting bit of data into that discussion:

People who signed up for Netflix this quarter stayed with Netflix. In other words, Netflix saw very little “free-trial gaming” in order to, let’s say, binge on House of Cards and then cancel the subscription shortly after.

Some investors worried that the House of Cards fans would take advantage of our free trial, watch the show, and then cancel. However, there was very little free-trial gaming – less than 8,000 people did this – out of millions of free trials in the quarter.

Netflix has stated in the past that they will not release viewing data on their original series. So, while we don’t really know exactly how successful House of Cards was for Netflix (in terms of the viewership stats), we know that it was a pretty big success by many other metrics.

A recent survey suggested that around 10% of Netflix’s total subscriber base had watched at least one episode of House of Cards in its first couple of weeks of availability. That survey also found that 86% of subscribers said that they were less likely to cancel their subscription after watching House of Cards. That last figure echoes what Netflix is revealing today – that House of Cards drew people in, and once they were hooked, they decided to stay around.

And really, that’s the goal. Netflix has put a lot of money into the new slate of original series, which includes the just released Hemlock Grove, and the upcoming 4th season of Arrested Development.

“As we’ve said before, our first slate of Originals will represent a small percentage of both our content budget (i.e. P&L expense) and total viewing hours this year, though cash use is front loaded relative to the P&L expense. Long term, we believe the value of our Original series in driving acquisition and retention improvements will be borne out as we add more seasons of already popular shows like House of Cards and further series. Harry Potter was not a phenomenon in book one, compared to later books in the series.”

Here’s Google’s Full Earnings Call

Chris Crum — Fri, 19 Apr 2013 14:47:33 +0000

Google released its Q1 earnings on Thursday, beating Wall Street estimates. The company reported $14 billion in revenue, up 31% year-over-year.

Google has made available its entire earnings call for all to listen to after it was broadcast live . If you want to revisit it, here you go:

You can see the full earnings release here.

Microsoft Reports $20.49 Billion in Revenue, CFO Leaves

Chris Crum — Thu, 18 Apr 2013 21:19:51 +0000

Microsoft released its Q3 earnings, including $20.49 billion in revenue. Operating income was $7.61 billion. Net income was $6.06 billion.

CEO Steve Ballmer said, “The bold bets we made on cloud services are paying off as people increasingly choose Microsoft services including Office 365, Windows Azure, Xbox LIVE, and Skype. While there is still work to do, we are optimistic that the bets we’ve made on Windows devices position us well for the long-term.”

In addition to the results, the company announced that CFO Peter Klein will leave at the end of the current fiscal year after four years in the role and 11 years with the company.

“I’ve had a great experience as CFO and overall in my time at Microsoft,” Klein said. “We have an incredibly strong finance organization, and I’m looking forward to working with my successor on the transition through the end of the fiscal year.”

Here’s the release in its entirety:

REDMOND, Wash. — Apr. 18, 2013 — Microsoft Corp. today announced quarterly revenue of $20.49 billion for the quarter ended March 31, 2013. Operating income, net income, and diluted earnings per share for the quarter were $7.61 billion, $6.06 billion, and $0.72 per share.

These financial results reflect the net recognition of revenue related to the Windows Upgrade Offer, Office Upgrade Offer and Pre-Sales, and the Entertainment and Devices Division Video Game Deferral, partially offset by the European Commission fine. The following table reconciles these financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. We have provided this non-GAAP financial information to aid investors in better understanding the company’s performance.

Download: Web

“The bold bets we made on cloud services are paying off as people increasingly choose Microsoft services including Office 365, Windows Azure, Xbox LIVE, and Skype,” said Steve Ballmer, chief executive officer at Microsoft. “While there is still work to do, we are optimistic that the bets we’ve made on Windows devices position us well for the long-term.”

The Microsoft Business Division posted $6.32 billion of revenue, an 8% increase from the prior year period. Adjusting for the net recognition of revenue related to the Office Upgrade Offer and Pre-Sales, Microsoft Business Division non-GAAP revenue increased 5%. During the quarter, we launched the new Office, enhancing productivity and the user experience through new mobility, social, and cloud features.

The Server & Tools business reported $5.04 billion of revenue, an 11% increase from the prior year period, driven by double-digit percentage revenue growth in SQL Server and System Center.

“Our enterprise business continues to thrive,” said Kevin Turner, chief operating officer at Microsoft. “Enterprise customers are increasingly turning to Microsoft for their IT solutions and as a result, we continue to take share from our competitors in key areas including hybrid cloud, data platform, and virtualization.”

The Windows Division posted revenue of $5.70 billion, a 23% increase from the prior year period. Adjusting for the recognition of revenue related to the Windows Upgrade Offer, Windows Division non-GAAP revenue was flat. During the quarter, we added to the Surface family of devices with Surface Pro.

The Online Services Division reported revenue of $832 million, an 18% increase from the prior year period. Online advertising revenue grew 22% driven by an increase in revenue per search.

The Entertainment and Devices Division posted revenue of $2.53 billion, an increase of 56% from the prior year period. Adjusting for the recognition of revenue related to the Video Game Deferral, the division’s non-GAAP revenue increased 33% for the third quarter. Xbox LIVE now has over 46 million members worldwide, an 18% increase from the prior year period.

“Our diverse business continues to deliver solid financial results, even as we navigate the evolving device market,” said Peter Klein, chief financial officer at Microsoft. “Looking ahead, we will continue to invest in long-term growth opportunities to drive our devices and services strategy forward and deliver ongoing value to shareholders.”

Business Outlook

Adjusting for the European Commission fine, Microsoft is revising operating expense guidance downward and now offers a range of $30.2 billion to $30.5 billion for the full year ending June 30, 2013. Microsoft also offers preliminary fiscal year 2014 operating expense guidance of $31.6 billion to $32.2 billion, representing 4% to 6% growth from the mid-point of fiscal year 2013 adjusted guidance.

CFO Transition

The company also announced Microsoft CFO Peter Klein will leave the company at the end of the current fiscal year, after nearly four years in role and 11 years at the company. Microsoft will be naming a new CFO from its finance leadership team in the next several weeks.

“It has been a pleasure to work with Peter as CFO,” Ballmer said. “He’s been a key member of my leadership team and a strategic advisor to me, and I wish him the very best.”

“I’ve had a great experience as CFO and overall in my time at Microsoft,” Klein said. “We have an incredibly strong finance organization, and I’m looking forward to working with my successor on the transition through the end of the fiscal year.”

Webcast Details

Peter Klein, chief financial officer, Frank Brod, chief accounting officer, and Chris Suh, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. PDT (5:30 p.m. EDT) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/investor/ . The webcast will be available for replay through the close of business on Apr. 18, 2014.

Adjusted Financial Results and Non-GAAP Measures

For the third quarter fiscal year 2013, GAAP revenue, operating income, and earnings per share included the recognition of revenue for the Windows Upgrade Offer, the Office Upgrade Offer and Pre-Sales, and the Entertainment and Devices Division Video Game Deferral, partially offset by the European Commission fine. These items are defined in our Form 10-Q for the quarterly period ended March 31, 2013. In addition to these financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information to aid investors in better understanding the company’s performance. Presenting these measures without the impact of these items gives additional insight into operational performance and helps clarify trends affecting the company’s business. For comparability of reporting, management considers this information in conjunction with GAAP amounts in evaluating business performance. These non-GAAP financial measures should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Non-GAAP Reconciliations

Windows Division

Download: Web

Microsoft Business Division

Download: Web

Entertainment and Devices Division

Download: Web

About Microsoft

Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

intense competition in all of Microsoft’s markets;

execution and competitive risks from our increasing focus on devices and services;

significant investments in new products and services that may not be profitable;

Microsoft’s continued ability to protect its intellectual property rights;

claims that Microsoft has infringed the intellectual property rights of others;

the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;

cyber-attacks and security vulnerabilities in Microsoft products that could reduce revenue or lead to liability;

improper disclosure of personal data that could result in liability and harm to Microsoft’s reputation;

outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;

government litigation and regulation that may limit how Microsoft designs and markets its products;

Microsoft’s ability to attract and retain talented employees;

delays in product development and related product release schedules;

unfavorable changes in general economic or market conditions, disruption of our partner networks or sales channels, or the availability of credit that affect demand for Microsoft’s products and services or the value of our investment portfolio;

adverse results in legal disputes;

unanticipated tax liabilities;

quality or supply problems in Microsoft’s consumer hardware or other vertically integrated hardware and software products;

impairment of goodwill or amortizable intangible assets causing a charge to earnings;

exposure to increased economic and regulatory uncertainties from operating a global business;

geopolitical conditions, natural disaster, cyber-attack or other catastrophic events disrupting Microsoft’s business; and

acquisitions, joint ventures, and strategic alliances that adversely affect the business.

For further information regarding risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/investor/.

All information in this release is as of Apr. 18, 2013. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.




Groupon, Inc.
Summary Consolidated and Segment Results
(in thousands, except share and per share amounts)
(unaudited)

	Three Months Ended March 31,												Y/Y % Growth
	2013			2012			Y/Y % Growth			FX Effect ⁽²⁾			excluding FX⁽²⁾
Gross Billings ⁽¹⁾
North America	$	681,319		$	553,557		23.1		%	$	(59	)	23.1		%
International		726,450			801,243		(9.3	)	%		(12,460	)	(7.8	)	%
Consolidated gross billings	$	1,407,769		$	1,354,800		3.9		%	$	(12,519	)	4.8		%

Revenue
North America	$	339,554		$	238,565		42.3		%	$	(27	)	42.3		%
International		261,848			320,718		(18.4	)	%		(4,540	)	(16.9	)	%
Consolidated revenue	$	601,402		$	559,283		7.5		%	$	(4,567	)	8.3		%

Income from operations	$	21,178		$	39,639		(46.6	)	%	$	2,377		(52.6	)	%

Net loss attributable to common stockholders	$	(3,992	)	$	(11,695	)	65.9		%	$	2,614		43.5		%

Net loss per share
Basic	$	(0.01	)	$	(0.02	)
Diluted	$	(0.01	)	$	(0.02	)

Weighted average basic shares outstanding		658,800,417			644,097,375
Weighted average diluted shares outstanding		658,800,417			644,097,375

Groupon, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

	Three Months Ended March 31,
	2013			2012
Operating activities
Net loss	$	(3,242	)	$	(3,593	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		20,700			11,716
Stock-based compensation		29,907			28,003
Deferred income taxes		(258	)		(876	)
Excess tax benefits on stock-based compensation		(832	)		(2,881	)
Loss on equity method investments		19			5,128
Acquisition-related expense (benefit), net		68			(52	)
Change in assets and liabilities, net of acquisitions:
Restricted cash		2,523			(1,357	)
Accounts receivable		(7,684	)		(11,878	)
Prepaid expenses and other current assets		12,527			(4,121	)
Accounts payable		(19,606	)		(1,821	)
Accrued merchant and supplier payables		(39,417	)		46,000
Accrued expenses and other current liabilities		13,302			13,420
Other, net		753			6,026
Net cash provided by operating activities		8,760			83,714

Net cash used in investing activities		(30,679	)		(46,444	)

Net cash used in financing activities		(9,342	)		(8,275	)

Effect of exchange rate changes on cash and cash equivalents		(12,378	)		9,059
Net (decrease) increase in cash and cash equivalents		(43,639	)		38,054
Cash and cash equivalents, beginning of period		1,209,289			1,122,935
Cash and cash equivalents, end of period	$	1,165,650		$	1,160,989

Groupon, Inc.
Consolidated Statements of Operations
(in thousands, except share and per share amounts)
(unaudited)

	Three Months Ended March 31,
	2013			2012
Revenue:
Third party and other	$	439,108		$	540,053
Direct		162,294			19,230
Total revenue		601,402			559,283
Cost of revenue:
Third party and other		70,016			102,629
Direct		152,377			16,869
Total cost of revenue		222,393			119,498
Gross Profit		379,009			439,785
Operating expenses:
Marketing		49,557			116,615
Selling, general and administrative		308,206			283,583
Acquisition-related expense (benefit), net		68			(52	)
Total operating expenses		357,831			400,146
Income from operations		21,178			39,639
Interest and other expense, net		(5,064	)		(3,539	)
Loss on equity method investments		(19	)		(5,128	)
Income before provision for income taxes		16,095			30,972
Provision for income taxes		19,337			34,565
Net loss		(3,242	)		(3,593	)
Less: Net income attributable to noncontrolling interests		(750	)		(880	)
Net loss attributable to Groupon, Inc.		(3,992	)		(4,473	)
Adjustment of redeemable noncontrolling interests to redemption value		-			(7,222	)
Net loss attributable to common stockholders	$	(3,992	)	$	(11,695	)

Net loss per share
Basic	$	(0.01	)	$	(0.02	)
Diluted	$	(0.01	)	$	(0.02	)

Weighted average number of shares outstanding
Basic		658,800,417			644,097,375
Diluted		658,800,417			644,097,375

Groupon, Inc.
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)

	March 31,			December 31,
	2013			2012
Assets
Current assets:
Cash and cash equivalents	$	1,165,650		$	1,209,289
Accounts receivable, net		102,717			96,713
Deferred income taxes		30,679			31,211
Prepaid expenses and other current assets		132,324			150,573
Total current assets		1,431,370			1,487,786
Property, equipment and software, net of accumulated depreciation and amortization of $60,291 and $46,236, respectively		128,773			121,072
Goodwill		205,466			206,684
Intangible assets, net		36,838			42,597
Investments		97,245			84,209
Deferred income taxes, non-current		29,710			29,916
Other non-current assets		52,855			59,210
Total Assets	$	1,982,257		$	2,031,474
Liabilities and Equity
Current liabilities:
Accounts payable	$	40,898		$	59,865
Accrued merchant and supplier payables		620,485			671,305
Accrued expenses		245,889			246,924
Deferred income taxes		52,875			53,700
Other current liabilities		140,433			136,647
Total current liabilities		1,100,580			1,168,441
Deferred income taxes, non-current		19,917			20,860
Other non-current liabilities		97,791			100,072
Total Liabilities		1,218,288			1,289,373
Commitments and contingencies
Stockholders’ Equity
Class A common stock, par value $0.0001 per share, 2,000,000,000 shares authorized, 657,774,882 and 654,523,706 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively		66			65
Class B common stock, par value $0.0001 per share, 10,000,000 shares authorized, 2,399,976 shares issued and outstanding at March 31, 2013 and December 31, 2012		-			-
Common stock, par value $0.0001 per share, 2,010,000,000 shares authorized, no shares issued and outstanding at March 31, 2013, and December 31, 2012		-			-
Additional paid-in capital		1,508,972			1,485,006
Accumulated deficit		(757,469	)		(753,477	)
Accumulated other comprehensive income		14,787			12,446
Total Groupon, Inc. Stockholders’ Equity		766,356			744,040
Noncontrolling interests		(2,387	)		(1,939	)
Total Equity		763,969			742,101
Total Liabilities and Equity	$	1,982,257		$	2,031,474

Groupon, Inc.
Segment Information
(in thousands)
(unaudited)

	Three Months Ended March 31,
	2013				2012
North America
Gross Billings⁽¹⁾	$	681,319			$	553,557
Revenue	$	339,554			$	238,565
Segment cost of revenue and operating expenses⁽²⁾		298,188				198,393
Segment operating income	$	41,366			$	40,172
Segment operating income as a percent of segment revenue		12.2		%		16.8		%

International
Gross Billings ⁽¹⁾	$	726,450			$	801,243
Revenue	$	261,848			$	320,718
Segment cost of revenue and operating expenses⁽²⁾		252,061				293,300
Segment operating income	$	9,787			$	27,418
Segment operating income as a percent of segment revenue		3.7		%		8.5		%

Consolidated
Gross Billings ⁽¹⁾	$	1,407,769			$	1,354,800
Revenue	$	601,402			$	559,283
Segment cost of revenue and operating expenses⁽²⁾		550,249				491,693
Segment operating income	$	51,153			$	67,590
Segment operating income as a percent of segment revenue		8.5		%		12.1		%

Stock-based compensation		29,907				28,003
Acquisition-related expense (benefit), net		68				(52	)
Income from operations		21,178				39,639
Interest and other expense, net		5,064				3,539
Loss on equity method investments		19				5,128
Income before provision for income taxes		16,095				30,972
Provision for income taxes		19,337				34,565
Net loss	$	(3,242	)		$	(3,593	)

Groupon, Inc.
Non-GAAP Reconciliation Schedules
(in thousands, except share and per share amounts)
(unaudited)

The following are reconciliations of earnings per share excluding stock-based compensation and acquisition-related expense (benefit), net and foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures. See “Supplemental Financial Information and Business Metrics” for reconciliations of Adjusted EBITDA, operating income (loss), excluding stock-based compensation and acquisition-related benefit (expense), net and free cash flow to the most comparable U.S. GAAP financial measures.


The following is a reconciliation of net loss per share to earnings per share excluding stock-based compensation and acquisition-related expense, net for the three months ended March 31, 2013:

	Three Months Ended
	March 31, 2013
Net loss attributable to common stockholders	$	(3,992	)
Stock-based compensation		29,907
Acquisition-related expense, net		68
Income tax effect of adjustments		(9,113	)
Net income attributable to common stockholders excluding stock-based
compensation and acquisition-related expense, net	$	16,870

Diluted shares		658,800,417
Incremental diluted shares ⁽¹⁾		12,175,734
Adjusted diluted shares		670,976,151

Diluted net loss per share	$	(0.01	)
Impact of stock-based compensation and acquisition-related
expense, net and the related income tax effects		0.04
Diluted earnings per share excluding stock-based compensation and
acquisition-related expense, net	$	0.03

The following is a reconciliation of foreign exchange rate neutral operating results to the most comparable U.S. GAAP financial measures, “Gross Billings,” “Revenue” and “Income from operations,” for the three months ended March 31, 2013. The effect on the Company’s gross billings, revenue and income from operations from changes in exchange rates versus the U.S. Dollar for the three months ended March 31, 2013 was as follows:

	Three Months Ended March 31, 2013							Three Months Ended March 31, 2013
	At Avg.		Exchange					At Avg.		Exchange
	Q1 2012 Rates ⁽¹⁾		Rate Effect ⁽²⁾			As Reported		Q4 2012 Rates ⁽³⁾		Rate Effect ⁽²⁾			As Reported
Gross billings	$	1,420,288	$	(12,519	)	$	1,407,769	$	1,408,597	$	(828	)	$	1,407,769
Revenue	$	605,969	$	(4,567	)	$	601,402	$	601,584	$	(182	)	$	601,402
Income from operations	$	18,801	$	2,377		$	21,178	$	21,698	$	(520	)	$	21,178

Groupon, Inc.
Supplemental Financial Information and Business Metrics⁽¹³⁾
(financial data in thousands, except per share data; active customers in millions)
(unaudited)

	Q1 2012				Q2 2012				Q3 2012				Q4 2012				Q1 2013
Segments
North America Segment
Gross Billings ⁽¹⁾
Local ⁽²⁾ Gross Billings
Third Party and Other	$	424,124			$	412,348			$	349,293			$	430,255			$	450,140
Direct		5,299				288				6,450				-				-
Total Local Gross Billings	$	429,423			$	412,636			$	355,743			$	430,255			$	450,140
Goods Gross Billings
Third Party and Other	$	75,908			$	40,173			$	25,508			$	31,270			$	17,294
Direct		2,282				52,773				126,608				209,575				148,065
Total Goods Gross Billings	$	78,190			$	92,946			$	152,116			$	240,845			$	165,359
Travel and Other Gross Billings
Third Party and Other	$	45,944			$	42,693			$	44,510			$	47,852			$	65,820
Direct		-				-				-				-				-
Total Travel and Other Gross Billings	$	45,944			$	42,693			$	44,510			$	47,852			$	65,820
Total Gross Billings
Third Party and Other	$	545,976			$	495,214			$	419,311			$	509,377			$	533,254
Direct		7,581				53,061				133,058				209,575				148,065
Total Gross Billings	$	553,557			$	548,275			$	552,369			$	718,952			$	681,319
Year-over-year growth		76		%		48		%		38		%		51		%		23		%
% of Consolidated Gross Billings		41		%		43		%		45		%		47		%		48		%
Gross Billings Trailing Twelve Months (TTM)	$	1,800,332			$	1,978,617			$	2,130,008			$	2,373,153			$	2,500,915

Revenue ⁽³⁾
Local Revenue
Third Party and Other	$	191,128			$	184,189			$	134,993			$	142,454			$	171,593
Direct		5,299				288				6,450				-				-
Total Local Revenue	$	196,427			$	184,477			$	141,443			$	142,454			$	171,593
Goods Revenue
Third Party and Other	$	24,941			$	10,387			$	13,064			$	11,877			$	3,144
Direct		2,282				52,774				126,608				209,575				148,065
Total Goods Revenue	$	27,223			$	63,161			$	139,672			$	221,452			$	151,209
Travel and Other Revenue
Third Party and Other	$	14,915			$	12,543			$	10,488			$	11,445			$	16,752
Direct		-				-				-				-				-
Total Travel and Other Revenue	$	14,915			$	12,543			$	10,488			$	11,445			$	16,752
Total Revenue
Third Party and Other	$	230,984			$	207,119			$	158,545			$	165,776			$	191,489
Direct		7,581				53,062				133,058				209,575				148,065
Total Revenue	$	238,565			$	260,181			$	291,603			$	375,351			$	339,554
Year-over-year growth		75		%		66		%		81		%		109		%		42		%
% of Consolidated Revenue		43		%		46		%		51		%		59		%		56		%
Revenue TTM	$	736,933			$	839,909			$	969,987			$	1,165,700			$	1,266,689

Cost of Revenue ⁽⁴⁾
Local Cost of Revenue
Third Party and Other	$	51,782			$	35,710			$	13,176			$	23,203			$	25,915
Direct		4,663				234				5,231				-				-
Total Local Cost of Revenue	$	56,445			$	35,944			$	18,407			$	23,203			$	25,915
Goods Cost of Revenue
Third Party and Other	$	6,757			$	2,014			$	1,275			$	1,935			$	475
Direct		2,008				45,925				110,329				196,789				138,278
Total Goods Cost of Revenue	$	8,765			$	47,939			$	111,604			$	198,724			$	138,753
Travel and Other Cost of Revenue
Third Party and Other	$	4,041			$	2,431			$	1,024			$	1,864			$	2,530
Direct		-				-				-				-				-
Total Travel and Other Cost of Revenue	$	4,041			$	2,431			$	1,024			$	1,864			$	2,530
Total Cost of Revenue
Third Party and Other	$	62,580			$	40,155			$	15,475			$	27,002			$	28,920
Direct		6,671				46,159				115,560				196,789				138,278
Total Cost of Revenue	$	69,251			$	86,314			$	131,035			$	223,791			$	167,198
% of North America Total Revenue		29		%		33		%		45		%		60		%		49		%

Gross Profit
Local Gross Profit
Third Party and Other	$	139,346			$	148,479			$	121,817			$	119,251			$	145,678
Direct		636				54				1,219				-				-
Total Local Gross Profit	$	139,982			$	148,533			$	123,036			$	119,251			$	145,678
% of North America Total Local Revenue		71.3	%	%		80.5	%	%		87.0	%	%		83.7	%	%		84.9	%	%
% of North America Total Local Gross Billings		32.6	%	%		36.0	%	%		34.6	%	%		27.7	%	%		32.4	%	%
Goods Gross Profit
Third Party and Other	$	18,184			$	8,373			$	11,789			$	9,942			$	2,669
Direct		274				6,849				16,279				12,786				9,787
Total Goods Gross Profit	$	18,458			$	15,222			$	28,068			$	22,728			$	12,456
% of North America Total Goods Revenue		67.8	%	%		24.1	%	%		20.1	%	%		10.3	%	%		8.2	%	%
% of North America Total Goods Gross Billings		23.6	%	%		16.4	%	%		18.5	%	%		9.4	%	%		7.5	%	%
Travel and Other Gross Profit
Third Party and Other	$	10,874			$	10,112			$	9,464			$	9,581			$	14,222
Direct		-				-				-				-				-
Total Travel and Other Gross Profit	$	10,874			$	10,112			$	9,464			$	9,581			$	14,222
% of North America Total Travel and Other Revenue		72.9	%	%		80.6	%	%		90.2	%	%		83.7	%	%		84.9	%	%
% of North America Total Travel and Other Gross Billings		23.7	%	%		23.7	%	%		21.3	%	%		20.0	%	%		21.6	%	%
Total Gross Profit
Third Party and Other	$	168,404			$	166,964			$	143,070			$	138,774			$	162,569
Direct		910				6,903				17,498				12,786				9,787
Total Gross Profit	$	169,314			$	173,867			$	160,568			$	151,560			$	172,356
% of North America Total Revenue		71.0	%	%		66.8	%	%		55.1	%	%		40.4	%	%		50.8	%	%
% of North America Total Gross Billings		30.6	%	%		31.7	%	%		29.1	%	%		21.1	%	%		25.3	%	%

Operating Income Excl Stock-Based Compensation (SBC), Acquisition-Related Expenses	$	40,172			$	43,429			$	39,093			$	17,032			$	41,366
Year-over-year growth		N/A				N/A				108		%		(7	)	%		3		%
% of Consolidated Operating Income Excl SBC, Acq-Related		59		%		60		%		77		%		124		%		81		%
Operating Margin Excl SBC, Acq-Related (% of North America Total revenue)		16.8		%		16.7		%		13.4		%		4.5		%		12.2		%
Year-over-year growth (bps)		3,278				2,337				170				(570	)			(460	)
Operating Income TTM Excl SBC, Acq-Related	$	66,746			$	120,676			$	140,933			$	139,726			$	140,920
Operating Margin TTM Excl SBC, Acq-Related (% of North America Total TTM revenue)		9.1		%		14.4		%		14.5		%		12.0		%		11.1		%
Year-over-year growth (bps)		2,197				2,601				2,100				1,120				200


International Segment	Q1 2012				Q2 2012				Q3 2012				Q4 2012				Q1 2013
Gross Billings
Local Gross Billings
Third Party and Other	$	465,879			$	423,313			$	328,044			$	368,898			$	379,413
Direct		-				-				-				-				-
Total Local Gross Billings	$	465,879			$	423,313			$	328,044			$	368,898			$	379,413
Goods Gross Billings
Third Party and Other	$	199,988			$	186,899			$	211,464			$	285,057			$	212,736
Direct		7,396				12,288				11,930				15,601				14,229
Total Goods Gross Billings	$	207,384			$	199,187			$	223,394			$	300,658			$	226,965
Travel and Other Gross Billings
Third Party and Other	$	123,727			$	115,901			$	114,449			$	131,944			$	120,072
Direct		4,253				-				-				-				-
Total Travel and Other Gross Billings	$	127,980			$	115,901			$	114,449			$	131,944			$	120,072
Total Gross Billings
Third Party and Other	$	789,594			$	726,113			$	653,957			$	785,899			$	712,221
Direct		11,649				12,288				11,930				15,601				14,229
Total Gross Billings	$	801,243			$	738,401			$	665,887			$	801,500			$	726,450
Year-over-year growth		127		%		32		%		(12	)	%		6		%		(9	)	%
Year-over-year growth, excluding FX⁽⁵⁾		138		%		45		%		(4	)	%		9		%		(8	)	%
% of Consolidated Gross Billings		59		%		57		%		55		%		53		%		52		%
Gross Billings TTM	$	2,871,795			$	3,050,937			$	2,960,592			$	3,007,031			$	2,932,238

Revenue
Local Revenue
Third Party and Other	$	213,166			$	193,861			$	164,184			$	144,834			$	155,800
Direct		-				-				-				-				-
Total Local Revenue	$	213,166			$	193,861			$	164,184			$	144,834			$	155,800
Goods Revenue
Third Party and Other	$	60,365			$	67,864			$	71,310			$	74,702			$	63,937
Direct		7,396				12,288				11,930				15,600				14,229
Total Goods Revenue	$	67,761			$	80,152			$	83,240			$	90,302			$	78,166
Travel and Other Revenue
Third Party and Other	$	35,538			$	34,141			$	29,525			$	27,815			$	27,882
Direct		4,253				-				-				-				-
Total Travel and Other Revenue	$	39,791			$	34,141			$	29,525			$	27,815			$	27,882
Total Revenue
Third Party and Other	$	309,069			$	295,866			$	265,019			$	247,351			$	247,619
Direct		11,649				12,288				11,930				15,600				14,229
Total Revenue	$	320,718			$	308,154			$	276,949			$	262,951			$	261,848
Year-over-year growth		102		%		31		%		3		%		(16	)	%		(18	)	%
Year-over-year growth, excluding FX		112		%		44		%		13		%		(14	)	%		(17	)	%
% of Consolidated Revenue		57		%		54		%		49		%		41		%		44		%
Revenue TTM	$	1,137,257			$	1,210,034			$	1,218,347			$	1,168,772			$	1,109,902

Cost of Revenue
Local Cost of Revenue
Third Party and Other	$	27,622			$	24,162			$	23,729			$	20,423			$	20,115
Direct		-				-				-				-				-
Total Local Cost of Revenue	$	27,622			$	24,162			$	23,729			$	20,423			$	20,115
Goods Cost of Revenue
Third Party and Other	$	7,822			$	8,459			$	10,702			$	12,558			$	17,381
Direct		6,474				11,993				12,053				21,778				14,099
Total Goods Cost of Revenue	$	14,296			$	20,452			$	22,755			$	34,336			$	31,480
Travel and Other Cost of Revenue
Third Party and Other	$	4,605			$	4,256			$	4,267			$	3,922			$	3,600
Direct		3,724				-				-				-				-
Total Travel and Other Cost of Revenue	$	8,329			$	4,256			$	4,267			$	3,922			$	3,600
Total Cost of Revenue
Third Party and Other	$	40,049			$	36,877			$	38,698			$	36,903			$	41,096
Direct		10,198				11,993				12,053				21,778				14,099
Total Cost of Revenue	$	50,247			$	48,870			$	50,751			$	58,681			$	55,195
% of International Total Revenue		16		%		16		%		18		%		22		%		21		%

Gross Profit
Local Gross Profit
Third Party and Other	$	185,544			$	169,699			$	140,455			$	124,411			$	135,685
Direct		-				-				-				-				-
Total Local Gross Profit	$	185,544			$	169,699			$	140,455			$	124,411			$	135,685
% of International Total Local Revenue		87.0	%	%		87.5	%	%		85.5	%	%		85.9	%	%		87.1	%	%
% of International Total Local Gross Billings		39.8	%	%		40.1	%	%		42.8	%	%		33.7	%	%		35.8	%	%
Goods Gross Profit
Third Party and Other	$	52,543			$	59,405			$	60,608			$	62,144			$	46,556
Direct		922				295				(123	)			(6,178	)			130
Total Goods Gross Profit	$	53,465			$	59,700			$	60,485			$	55,966			$	46,686
% of International Total Goods Revenue		78.9	%	%		74.5	%	%		72.7	%	%		62.0	%	%		59.7	%	%
% of International Total Goods Gross Billings		25.8	%	%		30.0	%	%		27.1	%	%		18.6	%	%		20.6	%	%
Travel and Other Gross Profit
Third Party and Other	$	30,933			$	29,885			$	25,258			$	23,893			$	24,282
Direct		529				-				-				-				-
Total Travel and Other Gross Profit	$	31,462			$	29,885			$	25,258			$	23,893			$	24,282
% of International Total Travel and Other Revenue		79.1	%	%		87.5	%	%		85.5	%	%		85.9	%	%		87.1	%	%
% of International Total Travel and Other Gross Billings		24.6	%	%		25.8	%	%		22.1	%	%		18.1	%	%		20.2	%	%
Total Gross Profit
Third Party and Other	$	269,020			$	258,989			$	226,321			$	210,448			$	206,523
Direct		1,451				295				(123	)			(6,178	)			130
Total Gross Profit	$	270,471			$	259,284			$	226,198			$	204,270			$	206,653
% of International Total Revenue		84.3	%	%		84.1	%	%		81.7	%	%		77.7	%	%		78.9	%	%
% of International Total Gross Billings		33.8	%	%		35.1	%	%		34.0	%	%		25.5	%	%		28.4	%	%

Operating Income (Loss) Excl SBC, Acq-Related	$	27,418			$	28,505			$	11,395			$	(3,329	)		$	9,787
Year-over-year growth		N/A				155				N/A				(1,060	)	%		(64	)	%
% of Consolidated Operating Income Excl SBC, Acq-Related		41		%		40		%		23		%		(24	)	%		19		%
Operating Margin Excl SBC, Acq-Related (% of International Total revenue)		8.5		%		9.3		%		4.1		%		(1.3	)	%		3.7		%
Year-over-year growth (bps)		5,669				3,126				1,170				(120	)			(480	)
Operating (Loss) Income TTM Excl SBC, Acq-Related	$	(45,205	)		$	35,108			$	67,031			$	63,989			$	46,358
Operating Margin TTM Excl SBC, Acq-Related (% of International Total TTM revenue)		(4.0	)	%		2.9		%		5.5		%		5.5		%		4.2		%
Year-over-year growth (bps)		8,704				5,765				4,170				2,080				820


Consolidated Results of Operations	Q1 2012				Q2 2012				Q3 2012				Q4 2012				Q1 2013
Gross Billings
Local Gross Billings
Third Party and Other	$	890,003			$	835,661			$	677,337			$	799,153			$	829,533
Direct		5,299				288				6,450				-				-
Total Local Gross Billings	$	895,302			$	835,949			$	683,787			$	799,153			$	829,533
Goods Gross Billings
Third Party and Other	$	275,896			$	227,072			$	236,972			$	316,327			$	230,030
Direct		9,678				65,061				138,538				225,176				162,294
Total Goods Gross Billings	$	285,574			$	292,133			$	375,510			$	541,503			$	392,324
Travel and Other Gross Billings
Third Party and Other	$	169,671			$	158,594			$	158,959			$	179,796			$	185,892
Direct		4,253				-				-				-				-
Total Travel and Other Gross Billings	$	173,924			$	158,594			$	158,959			$	179,796			$	185,892
Total Gross Billings
Third Party and Other	$	1,335,570			$	1,221,327			$	1,073,268			$	1,295,276			$	1,245,475
Direct		19,230				65,349				144,988				225,176				162,294
Total Gross Billings	$	1,354,800			$	1,286,676			$	1,218,256			$	1,520,452			$	1,407,769
Year-over-year growth		103		%		38		%		5		%		24		%		4		%
Year-over-year growth, excluding FX		108		%		47		%		11		%		25		%		5		%
Gross Billings (TTM)	$	4,672,127			$	5,029,554			$	5,090,600			$	5,380,184			$	5,433,153
Year-over-year growth		241		%		128		%		61		%		35		%		16		%

Revenue
Local Revenue
Third Party and Other	$	404,294			$	378,050			$	299,177			$	287,288			$	327,393
Direct		5,299				288				6,450				-				-
Total Local Revenue	$	409,593			$	378,338			$	305,627			$	287,288			$	327,393
Goods Revenue
Third Party and Other	$	85,306			$	78,251			$	84,374			$	86,579			$	67,081
Direct		9,678				65,062				138,538				225,175				162,294
Total Goods Revenue	$	94,984			$	143,313			$	222,912			$	311,754			$	229,375
Travel and Other Revenue
Third Party and Other	$	50,453			$	46,684			$	40,013			$	39,260			$	44,634
Direct		4,253				-				-				-				-
Total Travel and Other Revenue	$	54,706			$	46,684			$	40,013			$	39,260			$	44,634
Total Revenue
Third Party and Other	$	540,053			$	502,985			$	423,564			$	413,127			$	439,108
Direct		19,230				65,350				144,988				225,175				162,294
Total Revenue	$	559,283			$	568,335			$	568,552			$	638,302			$	601,402
Year-over-year growth		89		%		45		%		32		%		30		%		8		%
Year-over-year growth, excluding FX		95		%		53		%		38		%		31		%		8		%
Total Consolidated Revenue TTM	$	1,874,190			$	2,049,943			$	2,188,334			$	2,334,472			$	2,376,591
Year-over-year growth		219		%		118		%		70		%		45		%		27		%

Cost of Revenue
Local Cost of Revenue
Third Party and Other	$	79,404			$	59,872			$	36,905			$	43,626			$	46,030
Direct		4,663				234				5,231				-				-
Total Local Cost of Revenue	$	84,067			$	60,106			$	42,136			$	43,626			$	46,030
Goods Cost of Revenue
Third Party and Other	$	14,579			$	10,473			$	11,977			$	14,493			$	17,856
Direct		8,482				57,918				122,382				218,567				152,377
Total Goods Cost of Revenue	$	23,061			$	68,391			$	134,359			$	233,060			$	170,233
Travel and Other Cost of Revenue
Third Party and Other	$	8,646			$	6,687			$	5,291			$	5,786			$	6,130
Direct		3,724				-				-				-				-
Total Travel and Other Cost of Revenue	$	12,370			$	6,687			$	5,291			$	5,786			$	6,130
Total Cost of Revenue
Third Party and Other	$	102,629			$	77,032			$	54,173			$	63,905			$	70,016
Direct		16,869				58,152				127,613				218,567				152,377
Total Cost of Revenue	$	119,498			$	135,184			$	181,786			$	282,472			$	222,393
% of Total Consolidated Revenue		21		%		24		%		32		%		44		%		37		%

Gross Profit
Local Gross Profit
Third Party and Other	$	324,890			$	318,178			$	262,272			$	243,662			$	281,363
Direct		636				54				1,219				-				-
Total Local Gross Profit	$	325,526			$	318,232			$	263,491			$	243,662			$	281,363
% of Total Consolidated Local Revenue		79.5	%	%		84.1	%	%		86.2	%	%		84.8	%	%		85.9	%	%
% of Total Consolidated Local Gross Billings		36.4	%	%		38.1	%	%		38.5	%	%		30.5	%	%		33.9	%	%
Goods Gross Profit
Third Party and Other	$	70,727			$	67,778			$	72,397			$	72,086			$	49,225
Direct		1,196				7,144				16,156				6,608				9,917
Total Goods Gross Profit	$	71,923			$	74,922			$	88,553			$	78,694			$	59,142
% of Total Consolidated Goods Revenue		75.7	%	%		52.3	%	%		39.7	%	%		25.2	%	%		25.8	%	%
% of Total Consolidated Goods Gross Billings		25.2	%	%		25.6	%	%		23.6	%	%		14.5	%	%		15.1	%	%
Travel and Other Gross Profit
Third Party and Other	$	41,807			$	39,997			$	34,722			$	33,474			$	38,504
Direct		529				-				-				-				-
Total Travel and Other Gross Profit	$	42,336			$	39,997			$	34,722			$	33,474			$	38,504
% of Total Consolidated Travel and Other Revenue		77.4	%	%		85.7	%	%		86.8	%	%		85.3	%	%		86.3	%	%
% of Total Consolidated Travel and Other Gross Billings		24.3	%	%		25.2	%	%		21.8	%	%		18.6	%	%		20.7	%	%
Total Gross Profit
Third Party and Other	$	437,424			$	425,953			$	369,391			$	349,222			$	369,092
Direct		2,361				7,198				17,375				6,608				9,917
Total Gross Profit	$	439,785			$	433,151			$	386,766			$	355,830			$	379,009
% of Total Consolidated Revenue		78.6	%	%		76.2	%	%		68.0	%	%		55.7	%	%		63.0	%	%
% of Total Consolidated Gross Billings		32.5	%	%		33.7	%	%		31.7	%	%		23.4	%	%		26.9	%	%

Operating Income Excl SBC, Acq-Related	$	67,590			$	71,934			$	50,488			$	13,703			$	51,153
Year-over-year growth		N/A				N/A				N/A				(24	)	%		(24	)	%
Operating Margin Excl SBC, Acq-Related (% of Total Consolidated revenue)		12.1		%		12.7		%		8.9		%		2.1		%		8.5		%
Year-over-year growth (bps)		4,534				2,853				930				(150	)			(360	)
Operating Income TTM Excl SBC, Acq-Related	$	21,541			$	155,784			$	207,964			$	203,715			$	187,278
Operating Margin TTM Excl SBC, Acq-Related (% of Total Consolidated TTM revenue)		1.1		%		7.6		%		9.5		%		8.7		%		7.9		%
Year-over-year growth (bps)		5,011				4,229				3,320				1,770				680

Operating Income (Loss)	$	39,639			$	46,485			$	25,438			$	(12,861	)		$	21,178
Year-over-year growth		N/A				N/A				N/A				14		%		(47	)	%
Operating Margin (% of Total Consolidated revenue)		7.1		%		8.2		%		4.5		%		(2.0	)	%		3.5		%
Year-over-year growth (bps)		4,673				3,391				457				100				(360	)
Operating (Loss) Income TTM	$	(76,599	)		$	70,913			$	96,590			$	98,701			$	80,240
Operating Margin TTM (% of Total Consolidated TTM revenue)		(4.1	)	%		3.5		%		4.4		%		4.2		%		3.4		%
Year-over-year growth (bps)		8,875				6,824				4,740				1,870				750

Net (Loss) Income Attributable to Common Stockholders		(11,695	)			28,386				(2,979	)			(81,089	)			(3,992	)
Weighted Average Basic Shares Outstanding		644,097				647,150				653,224				655,678				658,800
Weighted Average Diluted Shares Outstanding ⁽⁶⁾		644,097				663,123				653,224				655,678				658,800
Net (Loss) Earnings per Share
Basic	$	(0.02	)		$	0.04			$	(0.00	)		$	(0.12	)		$	(0.01	)
Diluted	$	(0.02	)		$	0.04			$	(0.00	)		$	(0.12	)		$	(0.01	)


	Q1 2012				Q2 2012				Q3 2012				Q4 2012				Q1 2013
The following is a quarterly reconciliation of Adjusted EBITDA to the most comparable U.S. GAAP financial measure, “Net (loss) income” and a quarterly reconciliation of operating income, excluding stock-based compensation and acquisition-related benefit (expense), net, to the most comparable U.S. GAAP financial measure, “Operating income (loss).” ⁽⁷⁾
Adjusted EBITDA	$	79,306			$	84,744			$	65,798			$	29,668			$	71,853
Depreciation and amortization		(11,716	)			(12,810	)			(15,310	)			(15,965	)			(20,700	)
Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net		67,590				71,934				50,488				13,703				51,153
Stock-based compensation		(28,003	)			(27,084	)			(22,619	)			(26,411	)			(29,907	)
Acquisition-related benefit (expense), net		52				1,635				(2,431	)			(153	)			(68	)
Operating income (loss)		39,639				46,485				25,438				(12,861	)			21,178
Non Operating Items
Interest and other (expense) income, net		(3,539	)			57,367				617				(48,279	)			(5,064	)
Loss on equity method investments		(5,128	)			(3,428	)			(138	)			(1,231	)			(19	)
Provision for income taxes		(34,565	)			(66,875	)			(26,857	)			(17,676	)			(19,337	)
Net (loss) income	$	(3,593	)		$	33,549			$	(940	)		$	(80,047	)		$	(3,242	)

The following is a trailing twelve months reconciliation of Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net, to the most comparable U.S. GAAP financial measure, “Operating (loss) Income.” ⁽⁷⁾
Operating income, excluding stock-based compensation and acquisition-related benefit (expense), net TTM	$	21,541			$	155,784			$	207,964			$	203,715			$	187,278
Stock-based compensation		(102,729	)			(91,095	)			(110,374	)			(104,117	)			(106,021	)
Acquisition-related benefit (expense), net		4,589				6,224				(1,000	)			(897	)			(1,017	)
Operating (loss) income TTM	$	(76,599	)		$	70,913			$	96,590			$	98,701			$	80,240

The following is a quarterly reconciliation of foreign exchange rate neutral Gross Billings growth from the comparable quarterly periods of the prior year to reported Gross billings growth from the comparable quarterly periods of the prior year.⁽⁸⁾
International Gross Billings growth, excluding FX		138		%		45		%		(4	)	%		9		%		(8	)	%
FX Effect		(11	)	%		(13	)	%		(8	)	%		(3	)	%		(1	)	%
International Gross Billings growth		127		%		32		%		(12	)	%		6		%		(9	)	%

Consolidated Gross Billings growth, excluding FX		108		%		47		%		11		%		25		%		5		%
FX Effect		(5	)	%		(9	)	%		(6	)	%		(1	)	%		(1	)	%
Consolidated Gross Billings growth		103		%		38		%		5		%		24		%		4		%

The following is a quarterly reconciliation of foreign exchange rate neutral Revenue growth from the comparable quarterly periods of the prior year to reported Revenue growth from the comparable quarterly periods of the prior year.⁽⁸⁾
International Revenue growth, excluding FX		112		%		44		%		13		%		(14	)	%		(17	)	%
FX Effect		(10	)	%		(13	)	%		(10	)	%		(2	)	%		(1	)	%
International Revenue growth		102		%		31		%		3		%		(16	)	%		(18	)	%

Consolidated Revenue growth, excluding FX		95		%		53		%		38		%		31		%		8		%
FX Effect		(6	)	%		(8	)	%		(6	)	%		(1	)	%		-		%
Consolidated Revenue growth		89		%		45		%		32		%		30		%		8		%

The following is a reconciliation of free cash flow to the most comparable U.S. GAAP financial measure, “Net cash provided by operating activities.”
Net cash provided by operating activities	$	83,714			$	75,315			$	42,088			$	65,717			$	8,760
Purchases of property, equipment and capitalized software		(13,083	)			(26,709	)			(16,010	)			(40,034	)			(14,468	)
Free cash flow ⁽⁹⁾	$	70,631			$	48,606			$	26,078			$	25,683			$	(5,708	)

Net cash provided by operating activities (TTM)	$	356,221			$	392,517			$	370,194			$	266,834			$	191,880
Purchases of property, equipment and capitalized software (TTM)		(45,932	)			(62,401	)			(69,788	)			(95,836	)			(97,221	)
Free cash flow (TTM)	$	310,289			$	330,116			$	300,406			$	170,998			$	94,659

Net cash used in investing activities	$	(46,444	)		$	(60,153	)		$	(35,629	)		$	(52,753	)		$	(30,679	)
Net cash (used in) provided by financing activities	$	(8,275	)		$	24,158			$	2,707			$	(6,495	)		$	(9,432	)

Net cash used in investing activities (TTM)	$	(149,583	)		$	(184,552	)		$	(177,133	)		$	(194,979	)		$	(179,214	)
Net cash provided by financing activities (TTM)	$	746,824			$	771,404			$	765,503			$	12,095			$	11,028

Other Metrics
Active Customers⁽¹⁰⁾
North America		14.9				15.1				16.0				17.2				18.2
International		22.0				22.9				23.5				23.8				23.5
Total Active Customers		36.9				38.0				39.5				41.0				41.7

TTM Gross Billings / Average Active Customer ⁽¹¹⁾
North America	$	156			$	151			$	148			$	152			$	151
International	$	197			$	175			$	149			$	138			$	129
Consolidated	$	179			$	165			$	149			$	144			$	138

Headcount
Sales ⁽¹²⁾		5,735				5,587				5,087				4,677				4,566
% North America		21	%			20	%			24	%			25	%			28	%
% International		79	%			80	%			76	%			75	%			72	%
Other		6,813				7,233				6,779				6,717				6,433
Total Headcount		12,548				12,820				11,866				11,394				10,999

First Quarter 2013 Financial Summary

In millions, except percentages and per share amounts	Q1’12	Q1’13

Revenue	$ 1,058	$ 1,458
Income from Operations
GAAP	$ 381	$ 373
Non-GAAP	$ 485	$ 563
Operating Margin
GAAP	36%	26%
Non-GAAP	46%	39%
Net Income
GAAP	$ 205	$ 219
Non-GAAP	$ 287	$ 312
Diluted Earnings per Share (EPS)
GAAP	$ 0.09	$ 0.09
Non-GAAP	$ 0.12	$ 0.12

FACEBOOK, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except for per share amounts)
(Unaudited)

			Three Months Ended
			March 31,
			2012	2013

Revenue			$ 1,058	$ 1,458

Costs and expenses:
	Cost of revenue		277	413
	Research and development		153	293
	Marketing and sales		143	203
	General and administrative		104	176
		Total costs and expenses	677	1,085

Income from operations			381	373

Interest and other income (expense), net:
	Interest expense		(13)	(15)
	Other income (expense), net		14	(5)
Income before provision for income taxes			382	353
Provision for income taxes			177	134
Net income			$ 205	$ 219
Less: Net income attributable to participating securities			68	2
Net income attributable to Class A and Class B common stockholders			$ 137	$ 217

Earnings per share attributable to Class A and Class B
common stockholders:
	Basic		$ 0.10	$ 0.09
	Diluted		$ 0.09	$ 0.09

Weighted-average shares used to compute earnings per share
attributable to Class A and Class B common stockholders:
	Basic		1,347	2,386
	Diluted		1,527	2,499

Share-based compensation expense included in costs & expenses:
	Cost of revenue		$ 5	$ 8
	Research and development		60	117
	Marketing and sales		19	24
	General and administrative		19	21
		Total share-based compensation expense	$ 103	$ 170

Payroll tax expenses related to share-based compensation included in costs & expenses:
	Cost of revenue		$ -	$ 1
	Research and development		1	11
	Marketing and sales		-	4
	General and administrative		-	4
		Total payroll tax expenses related to share-based compensation	$ 1	$ 20




FACEBOOK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions)
(Unaudited)


			December 31,	March 31,
			2012	2013
Assets
Current assets:
	Cash and cash equivalents		$ 2,384	$ 2,325
	Marketable securities		7,242	7,147
	Accounts receivable		719	659
	Income tax refundable		451	426
	Prepaid expenses and other current assets		471	485
		Total current assets	11,267	11,042

Property and equipment, net			2,391	2,533
Goodwill and intangible assets, net			1,388	1,501
Other assets			57	87
Total assets			$ 15,103	$ 15,163

Liabilities and stockholders’ equity
Current liabilities:
	Accounts payable		$ 65	$ 75
	Platform partners payable		169	190
	Accrued expenses and other current liabilities		423	430
	Deferred revenue and deposits		30	30
	Current portion of capital lease obligations		365	338
		Total current liabilities	1,052	1,063

Capital lease obligations, less current portion			491	420
Long-term debt			1,500	1,500
Other liabilities			305	356
		Total liabilities	3,348	3,339

Stockholders’ equity
	Common stock and additional paid-in capital		10,094	9,961
	Accumulated other comprehensive income (loss)		2	(15)
	Retained earnings		1,659	1,878
		Total stockholders’ equity	11,755	11,824
Total liabilities and stockholders’ equity			$ 15,103	$ 15,163




Reconciliation of Non-GAAP Results to Nearest GAAP Measures
(In millions, except for number of shares)
(Unaudited)

		Three Months Ended
		March 31,
		2012	2013

GAAP revenue		$ 1,058	$ 1,458
	Foreign exchange effect on 2013 revenue using 2012 rates		4
Revenue excluding foreign exchange effect			$ 1,462

GAAP revenue year-over-year change %			38%
Revenue excluding foreign exchange effect year-over-year change %			38%

GAAP advertising revenue		$ 872	$ 1,245
	Foreign exchange effect on 2013 advertising revenue using 2012 rates		3
Advertising revenue excluding foreign exchange effect			$ 1,248

GAAP advertising revenue year-over-year change %			43%
Advertising revenue excluding foreign exchange effect year-over-year change %			43%

GAAP costs and expenses		$ 677	$ 1,085
	Share-based compensation expense	(103)	(170)
	Payroll tax expenses related to share-based compensation	(1)	(20)
Non-GAAP costs and expenses		$ 573	$ 895

GAAP income from operations		$ 381	$ 373
	Share-based compensation expense	103	170
	Payroll tax expenses related to share-based compensation	1	20
Non-GAAP income from operations		$ 485	$ 563

GAAP net income		$ 205	$ 219
	Share-based compensation expense	103	170
	Payroll tax expenses related to share-based compensation	1	20
	Income tax adjustments	(22)	(97)
Non-GAAP net income		$ 287	$ 312

GAAP diluted shares		1,527	2,499
	Assumed preferred stock conversion	546	-
	Dilutive equity awards excluded from GAAP¹	233	-
Non-GAAP diluted shares		2,306	2,499

GAAP diluted earnings per share		$ 0.09	$ 0.09
	Net income attributable to participating securities	0.04	-
	Non-GAAP adjustments to net income	0.05	0.03
	Non-GAAP adjustments to diluted shares	(0.06)	-
Non-GAAP diluted earnings per share		$ 0.12	$ 0.12

GAAP operating margin		36%	26%
	Share-based compensation expense	10%	12%
	Payroll tax expenses related to share-based compensation	0%	1%
Non-GAAP operating margin		46%	39%

GAAP profit before tax		$ 382	$ 353
GAAP provision for income taxes		177	134
GAAP effective tax rate		46%	38%

GAAP profit before tax		$ 382	$ 353
Share-based compensation and related payroll tax expenses		104	190
Non-GAAP profit before tax		$ 486	$ 543
Non-GAAP provision for income taxes		199	231
Non-GAAP effective tax rate		41%	43%


¹Gives effect to unvested RSUs in periods prior to our IPO for comparability


AMAZON.COM, INC.
Consolidated Statements of Cash Flows
(in millions)
(unaudited)

	Three Months Ended						Twelve Months Ended
	March 31,						March 31,
	2013			2012			2013			2012

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	$	8,084		$	5,269		$	2,288		$	2,641

OPERATING ACTIVITIES:
Net income (loss)		82			130			(87	)		561
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation of property and equipment, including internal-use software and website development, and other amortization		700			457			2,402			1,338
Stock-based compensation		229			160			901			605
Other operating expense (income), net		31			46			139			168
Losses (gains) on sales of marketable securities, net		-			(2	)		(7	)		(8	)
Other expense (income), net		68			15			306			(78	)
Deferred income taxes		(80	)		(38	)		(307	)		83
Excess tax benefits from stock-based compensation		-			(40	)		(390	)		(56	)
Changes in operating assets and liabilities:
Inventories		535			747			(1,211	)		(1,374	)
Accounts receivable, net and other		729			746			(877	)		(479	)
Accounts payable		(4,187	)		(4,258	)		2,141			1,388
Accrued expenses and other		(703	)		(529	)		864			721
Additions to unearned revenue		684			397			2,083			1,252
Amortization of previously unearned revenue		(460	)		(269	)		(1,712	)		(1,070	)
Net cash provided by (used in) operating activities		(2,372	)		(2,438	)		4,245			3,051

INVESTING ACTIVITIES:
Purchases of property and equipment, including internal-use software and website development		(670	)		(386	)		(4,068	)		(1,899	)
Acquisitions, net of cash acquired, and other		(103	)		(50	)		(798	)		(615	)
Sales and maturities of marketable securities and other investments		599			1,738			3,098			6,641
Purchases of marketable securities and other investments		(776	)		(852	)		(3,227	)		(5,997	)
Net cash provided by (used in) investing activities		(950	)		450			(4,995	)		(1,870	)

FINANCING ACTIVITIES:
Excess tax benefits from stock-based compensation		-			40			390			56
Common stock repurchased		-			(960	)		-			(1,237	)
Proceeds from long-term debt and other		25			68			3,319			154
Repayments of long-term debt, capital lease, and finance lease obligations		(182	)		(153	)		(603	)		(483	)
Net cash provided by (used in) financing activities		(157	)		(1,005	)		3,106			(1,510	)

Foreign-currency effect on cash and cash equivalents		(124	)		12			(163	)		(24	)
Net increase (decrease) in cash and cash equivalents		(3,603	)		(2,981	)		2,193			(353	)

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	4,481		$	2,288		$	4,481		$	2,288

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest on long-term debt	$	13		$	6		$	37		$	17
Cash paid for income taxes (net of refunds)		86			19			179			45
Property and equipment acquired under capital leases		340			149			993			721
Property and equipment acquired under build-to-suit leases		150			17			163			207


AMAZON.COM, INC.
Consolidated Statements of Operations
(in millions, except per share data)
(unaudited)

	Three Months Ended
	March 31,
	2013			2012

Net product sales	$	13,271		$	11,249
Net services sales		2,799			1,936
Total net sales		16,070			13,185

Operating expenses (1):
Cost of sales		11,801			10,027
Fulfillment		1,796			1,295
Marketing		632			480
Technology and content		1,383			945
General and administrative		246			200
Other operating expense (income), net		31			46
Total operating expenses		15,889			12,993

Income from operations		181			192

Interest income		10			12
Interest expense		(33	)		(21	)
Other income (expense), net		(77	)		(99	)
Total non-operating income (expense)		(100	)		(108	)

Income before income taxes		81			84

Benefit (provision) for income taxes		18			(43	)
Equity-method investment activity, net of tax		(17	)		89
Net income	$	82		$	130

Basic earnings per share	$	0.18		$	0.29

Diluted earnings per share	$	0.18		$	0.28


Weighted average shares used in computation of earnings per share:
Basic		455			453
Diluted		463			460

(1) Includes stock-based compensation as follows:
Fulfillment	$	61		$	37
Marketing		16			12
Technology and content		120			85
General and administrative		32			26


AMAZON.COM, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)

	Three Months Ended
	March 31,
	2013			2012

Net income	$	82		$	130

Other comprehensive income (loss):
Foreign currency translation adjustments, net of tax of $(9) and $(38)		(78	)		137
Net change in unrealized gains on available-for-sale securities:
Unrealized gains (losses), net of tax of $1 and $(3)		(2	)		7
Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax effect of $0 and $1		-			(2	)
Net unrealized gains (losses) on available-for-sale securities		(2	)		5
Total other comprehensive income (loss)		(80	)		142

Comprehensive income	$	2		$	272


AMAZON.COM, INC.
Supplemental Net Sales Information
(in millions)
(unaudited)

	Three Months Ended
	March 31,
	2013			2012
North America
Media	$	2,513		$	2,197
Electronics and other general merchandise		6,128			4,772
Other (1)		750			458
Total North America	$	9,391		$	7,427

International
Media	$	2,545		$	2,513
Electronics and other general merchandise		4,086			3,203
Other (1)		48			42
Total International	$	6,679		$	5,758

Consolidated
Media	$	5,058		$	4,710
Electronics and other general merchandise		10,214			7,975
Other (1)		798			500
Total consolidated	$	16,070		$	13,185

Y/Y Net Sales Growth:
North America:
Media		14	%		17	%
Electronics and other general merchandise		28			44
Other		64			66
Total North America		26			36

International:
Media		1	%		21	%
Electronics and other general merchandise		28			40
Other		14			24
Total International		16			31

Consolidated:
Media		7	%		19	%
Electronics and other general merchandise		28			43
Other		59			61
Total consolidated		22			34

Y/Y Net Sales Growth Excluding Effect of Exchange Rates:
International:
Media		7	%		22	%
Electronics and other general merchandise		32			42
Other		18			26
Total International		21			32

Consolidated:
Media		10	%		19	%
Electronics and other general merchandise		30			43
Other		60			61
Total consolidated		24			34

Consolidated Net Sales Mix:
Media		31	%		36	%
Electronics and other general merchandise		64			60
Other		5			4
		100	%		100	%

(1) Includes sales from non-retail activities, such as AWS in the North America segment, advertising services, and our co-branded credit card agreements in both segments.