Facebook Q3 2020

Edited to correct the link... I blame my mistake on how the design of their IR page totally guided my eye to the top of the list of "past events"... https://investor.fb.com/investor-events/default.aspx

dna_polymerase• 6 years ago

The link is for Q2.

isatty• 6 years ago

Wrong link. Correct link to Q3 https://s21.q4cdn.com/399680738/files/doc_financials/2020/q3...

seancoleman2• 6 years ago

"Our third quarter 2020 effective tax rate was 4%" [down from 17% YoY]. Numbers like this sure support the "rich corporations don't pay taxes" narrative with average Americans paying a 24% effective tax rates.

kortilla• 6 years ago

Effective tax rate in a single year isn’t too meaningful when they might be carrying over losses from previous years.

xmprt• 6 years ago

You're saying Facebook - a company that has been profitable for many years - is still carrying over losses from previous years?

seancoleman2• 6 years ago

For sure, and FB notes amortized investments bringing this figure down. The tax code rewards corporations for R&D investments. I think it's working. The optics are terrible though.

leetcrew• 6 years ago

maybe so, but it's kind of silly to compare corporate taxes with taxes paid by individuals. capital gains vs. income tax would be at least a little better.

rhacker• 6 years ago

Well, most of the expenditures are going to pay employees that pay 24% (or probably 34% with state taxes added).

huntermonk• 6 years ago

Very true. The engineers in California (most of us) pay 40%.

granzymes4• 6 years ago

But why tax corporations on income at all? All of that money will eventually be income for an actual person (employees, shareholders) who will be taxed on it, most likely at a rate above 24%. And don't forget that sales taxes and VATs exist.

Corporations don't exist, so they can't "pay" for the tax. With a corporate income tax, the incidence is out of policymakers' control and some percentage will fall on consumers. Just tax who you want to tax.

spiderfarmer• 6 years ago

Why wait for an “eventual” trickle down effect?

mushufasa• 6 years ago

Imagine the process of assessing and collecting a tax from a single entity.

Now imagine the process of assessing and collecting taxes from 93,000 entities, including enforcing penalties for people who inadequately report or pay.

jgalt2122• 6 years ago

That's a very sound argument if capital gains and wages were taxed at the same rate.

dragonwriter• 6 years ago

But why tax corporations at all?

Because otherwise they make great tax dodges.

All of that money will eventually be income for an actual person (employees, shareholders) who will be taxed on it, most likely at a rate above 24%.

No, it doesn't. The stuff that becomes employee income mostly isn't taxed as corporate income (its a deductible business expense). If it is distribute as dividends, its taxable to the recipient, but certainly that doesn't happen with all after tax corporate profits. Its very common for most investor returns to come as capital gains with the money retained/reinvested in the business.

talkingtab• 6 years ago

OMG. Apple as well as other large companies are sitting on billions of dollars. In other words they are not paying reasonable taxes, nor are they spending the money so that it can or would be taxed.

throwaway5752• 6 years ago

"Corporations don't exist, so they can't "pay" for the tax"

I'm sorry, but how do you square that with the legal rights via judicial precedence they have, like those described in https://en.wikipedia.org/wiki/Corporate_personhood ? How do you square it with the plain language of the USC on the matter (https://www.law.cornell.edu/uscode/text/1/1) ?

mbesto2• 6 years ago

Not taxing corporations sounds controversial on the surface but is actually not a terrible idea in practice. Just push the taxes down to the employee and you could theoretically collect more taxes.

They're going to dodge it anyway so all you're doing is creating jobs in other jurisdictions by attempting to tax them.

bhaile• 6 years ago

Per the PDF.

"Our third quarter 2020 effective tax rate was 4%, which reflects a one-time income tax benefit of $913 million related to the effects of a tax election to capitalize and amortize certain research and development expenses for U.S. income tax purposes.Excluding this tax benefit, our effective tax rate would have been 11 percentage points higher and our diluted EPS would havebeen $0.31 lower."

willcipriano2• 6 years ago

24% seems to be the top 0.01% of taxpayers federal tax burden, not the average and it does not include state and local taxes or property taxes.

According to this data, in 2017, the top 1 percent of taxpayers paid an average federal income tax rate of 26.76 percent. The bottom 99 percent, or all the rest of the taxpayers, paid an average rate of 11.4 percent. If we look at just the bottom 50 percent, the average rate paid by these taxpayers is even lower, at 4 percent.
At the very top end of the AGI distribution, we see average rates decrease slightly, but remain significantly higher than the average rates paid by those lower on the income distribution: 25 percent for the top 0.01 percent and 24 percent for the top 0.001 percent.

https://taxfoundation.org/average-federal-income-tax-rates-2....

skinnymuch• 6 years ago

I could be wrong but that blame will still be partially on this vague and seemingly bias non-profit.

Does federal income tax include or not include FICA? Presumably not. In which case the bottom 90%+ are paying some number of 10-15% more per year. Then the top few percent are paying less extra until you get to the top 1% and beyond where they are paying a fraction extra.

That tax alone completely invalidates the article and makes it seem incredibly biased.

s3r3nity• 6 years ago

- 28% increase in EPS

- 12% increase YOY for both DAU and MAU

Yet again, monster quarter and reports of FB's death have been proven to be premature.

Would be curious to understand more how much ROI they're seeing on hardware investments, like in Portal + Occulus.

objclxt• 6 years ago

Would be curious to understand more how much ROI they're seeing on hardware investments, like in Portal + Occulus.

It’ll be negative, both Oculus and Portal are sold at a significant loss. Of course, FB’s perspective is that the positive ROI won’t come until further down the line and it’s necessary to avoid the situation they found themselves in on mobile.

qgrgergfqgfev2• 6 years ago

Yet they're always sold out, and FB gets a cut from online game sales, it wouldn't surprise me if they're profitable already.

H8crilA• 6 years ago

Anything next to core advertising will look completely insignificant, both in terms of revenue and (hopefully also) in terms of costs. Same for Google, though the cloud revenue numbers are starting to be meaningful. BTW, Ruth just said on the Alphabet earnings call that they'll break down cloud numbers in Q4 (expenses; revenues are already broken down), retroactively to 2018, that will be interesting to look at.

thewarrior• 6 years ago

Highlights:

Revenue up by 22 % to $ 21.4 billion

Profits up by 29 % to $ 7.8 billion

Facebook Daily active users up by 12 % to 1.8 billion

Facebook Monthly active users up by 12 % to 2.7 billion

2.5 billion users using one of the apps(FB/IG/WhatsApp) daily.

3.2 billion users using one of the apps monthly up by 14 % for the year

Headcount grew by 32 % to 56k

$55 billion in cash reserves

bamboozled• 6 years ago

Great news for all! /s

agumonkey• 6 years ago

No mg of dopamine per second ?

More seriously I wonder what constitutes an active user. Scrolling for N minutes ? liking ? posting ? any combination of those ?

input_sh• 6 years ago

It's unique visits on the site in a given period. You merely have to click on a link to the website, or open the app on your phone, and you count as an "active" user.

FanaHOVA• 6 years ago

US usage is actually down though. DAU 198M -> 196M

aspaceman• 6 years ago

This explains a lot. I was confused by these numbers. So they're expanding rapidly internationally.

ksec4• 6 years ago

MAU is still increasing at ~2.7B. World Population without China ( Where Facebook can not be used ) is 6B. That is nearly half of the world on Facebook.

I know people on HN hate Facebook. But it is truly quite amazing looking at those numbers.

gonehome• 6 years ago

I wonder what percentage of the online population (excluding China).

75%? 80%?

ksec4• 6 years ago

If we assume vast majority of Internet users are Smartphone users. There are total of 4.5B Smartphone users, China has close to 1B. That is 2.7B out of 3.5B.

So Yes, roughly 77%.

didip• 6 years ago

If you count WhatsApp and Instagram, that number is not surprising at all.

dntrkv• 6 years ago

That's just FB, if you include WhatsApp and Insta, that number is 3.2B

stingraycharles• 6 years ago

Wait, they count one person using WhatsApp, Instagram and Facebook as 3 users? Even when you log in with the same account?

reaperducer• 6 years ago

MAU is still increasing at ~2.7B

Does Facebook specify what a "user" is?

Is just it someone with a Facebook/IG/WhatsApp/etc account who logs in?

Does it include someone with no Facebook account who clicks on a link to a page on Facebook?

Does it include someone who visits another web site that has a Facebook tracker on it?

surajama• 6 years ago

From the link in the post Facebook has two different metrics: MAU (month average users) and MAP (monthly average people). They don't define these terms but MAU sounds like someone with a Facebook/IG/WhatsApp/etc account who logs in, which that 2.74B figure applies to.

ebg13• 6 years ago

Do we have accurate estimates for how many of them are real and unique people?

esturk• 6 years ago

If China ever bans FB in Hong Kong, will that be the single largest drop in users in a single day for FB?

tomnipotent• 6 years ago

There are only 8M people in HK, so I doubt it. Turkey has banned FB a few times, and they have 82M people.

QuinnyPig• 6 years ago

I think that’s a bit unfair. People from many walks of life, with emphasis on a tremendously broad variety of disciplines also hate Facebook.

ffpip• 6 years ago

A large (very very large) percentage of people are from India.

Think of India's internet as America's internet from 2014. Everybody loves facebook here, there are 0 privacy laws.

ksec4• 6 years ago

Yes and many other countries in SEA, where Facebook = Internet. And Facebook also help many small medium businesses to find their target customers. Compared to older larger enterprise which are slow to react to Internet. These SME are thriving in the new Internet era. And overall a great contribution to the economy.

julienreszka• 6 years ago

How many are real people?

MentallyRetired• 6 years ago

Let's talk about Zuckerberg wanting to rewrite Section 230.

FriedPickles• 6 years ago

How come companies as capable as FB can't build their own investor relations site? They all seem to be hosted by this q4inc.com.

justapassenger2• 6 years ago

You outsource things that aren't your core competency. It's cheaper and more reliable that way.

joebasirico• 6 years ago

This slide deck makes me really uncomfortable.

1.8 Billion Active Users on Facebook in Q3 of 2020

Every user in the US brings gives Facebook about $40 in advertising revenue every quarter

Facebook made $21 BILLION dollars in advertising, just in Q3 of 2020

Facebook has an effective tax rate of between 4% (in Q3 of 2020) and 20% in Q4 of 2019.

You’re worth a bit less than $160/year to Facebook in advertising revenue. They made 70 Billion dollars last year, and have made almost 60B this year already (82% of what they made in 19). They are taxed in the low double digits.

My questions to you: - Did you get $160 worth of value out of Facebook? - What’s your annual tax rate?

My guess is it’s No to the first question and a lot more than 4% to the second.

darkwizard424• 6 years ago

A 4% effective tax rate has a lot more to do with investment in R&D, declaring losses in accordance to the tax code etc.

The optics are terrible, agreed on that.

Regarding your first question, its not about how much value I get out of Facebook, since I'm not paying $160 for it, advertisers are paying for the ability to reach people.

mhoad• 6 years ago

Let’s not pretend that Facebook isn’t ALSO involved in a lot of “technically not illegal but clearly unacceptable to the majority of society” tax avoidance strategies.

They aren’t unique in this sense but it’s just loophole after loophole and is the kind of thing that is at this point a textbook example of failed corporate/ social responsibility.

srtjstjsj• 6 years ago

$14/month is on par with other popular media sites like Netflix and Spotify.

Facebook employees and shareholders also pay tax on money they take out of Facebook.

Closi• 6 years ago

I also wonder if advertisers get value.

Have I been influenced to spend an additional $160? I’m highly doubtful but who knows!

justapassenger2• 6 years ago

It doesn't have to be additional spent. If coke can get you to buy their drink instead of pepsi, that's a dollar well spent, from their POV.

rlanday• 6 years ago

You seem to think that Facebook managed to get 2.74 billion monthly active users by providing a product that people don’t significantly value. 3.21 billion if you also count Messenger, WhatsApp, and Instagram.

mbesto2• 6 years ago

$160 worth of value out of Facebook

$13/month for WhatsApp is definitely worth it (if you take out the fact that its part of Facebook)

zeroonetwothree• 6 years ago

The $160 is value to the advertiser I don’t see how it would have anything to do with the value to the user. Since FB is free if it gives you even $1 of value you may as well use it.

purple_ferret• 6 years ago

I did my part by clicking on every Trump ad sent my way

luminati2• 6 years ago

~4bb per quarter (16bb annual) in r&d costs for a pure play software company seems high no? What on earth do they spend on? I know they pay high engineering salaries but even factoring that it doesn’t seem to make sense to my simple mind. Twitter comes in 1/16th which i still think is crazy high!

woobar• 6 years ago

Headcount is at 56K. $4.7B / 56,000 ~= $84K/quarter. Or $336K per year. I guess they spend it on compensation.

luminati2• 6 years ago

But not all would be r&d - assuming 33% of them are programmers/engineers, that comes to ~$1mm/year per person in comp

lanevorockz• 6 years ago

Of course Facebook is making money ... Manipulating the election is very profitable ... Nobody bothered ... of let's be ruled by dodgy algorithms until we die.

jgalt2122• 6 years ago

Any word on what per cent of ad revenue is on FB properties and what per cent is off?

Yuioup• 6 years ago

Is there anybody here who has succesfully migrated away? My biggest problem is that I want to stay in touch with friends and family abroad but I don't want to stay in the cesspool that is faecesbook.

Facebook Q3 2020

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