WebProNews

Category: PaymentTrends

PaymentTrends

  • Amazon Gives Amazon Register Customers Square Readers

    Amazon announced last fall that it was shutting down Amazon Local, its daily deals service, as well as Amazon Register, its Square competitor.

    Amazon Register had only been around a little more than a year before Amazon decided to pull the plug on it. Like Square, it enabled local businesses to accept credit and debit cards from a smartphone or tablet. The app that went with it offered reporting tools so businesses could track their bottom line performance, sales trends, peak sales times, etc.

    Amazon stopped accepting new customers for the product at the end of October, and said existing customers would be able to use it until February 1.

    Now that the date has come and gone, Amazon is reportedly offering free Square readers to former Amazon Register customers. Jason Del Rey at Re/code writes:

    The e-commerce giant is offering free Square credit card readers, which retail for $10, to business owners who had previously bought an Amazon Local Register, the company’s version of a card-swiping device that plugs into phones and tablets. The offer comes three months after Amazon announced it was discontinuing this payment processing service on Feb. 1. Amazon emailed its Local Register customers with the offer and a promotion code in the past week.

    Del Rey says that Square confirmed working with Amazon on the offer.

    Earlier this week, Square announced that the new Square Reader is available at Apple Stores.

    Image via Square

  • New Square Reader Hits Apple Stores

    New Square Reader Hits Apple Stores

    Square just announced that its new card reader is available for $49 online and at Apple retail locations in the U.S. The reader accepts chip cards and contactless payments like Apple Pay.

    “Local businesses across the country are already using Square’s newest reader and have the same advanced payment technology in their own stores that the big chains have,” a spokesperson for Square tells us in an email. “A tap of a phone or watch and their customers are out the door – it’s a simple, fast, and secure payment experience.”

    “We’re excited to get our hands on this technology and offer our customers an entirely new way to pay for the coffee we enjoy making for them everyday,” says Scott Carey, owner of Sump Coffee in St. Louis.

    In November, Square first gave the new reader to 100 local business owners in the U.S. after announcing it in June.

    More on the reader here.

    Image via Apple

  • Ali MacGraw And Ryan O’Neal Reminisce Over ‘Love Story’ Days At Harvard

    Lead stars of the ‘70s classic movie Love Story Ali MacGraw and Ryan O’Neal reunited at Harvard University where their characters met more than 45 years ago.

    MacGraw and O’Neal reminisced about the old times as they sat for an interview with journalist and moderator Alicia Anstead. Love Story got seven Academy nominations and won one for original score.

    During their campus visit, the two shared their Love Story experience and the life they lead after doing the film. Love Story earned $106 million at the box office on its original theatrical release which is equivalent to $650 million in 2016. However, the stars joked they did not get paid much.

    Ali MacGraw and Ryan O’Neal Played College Lovers in the 1970 film ‘Love Story’

    MacGraw revealed she only got $20,000 but said it was a lot of money during those times as she was not popular when they made the classic film. O’Neal even joked his talent fee was not enough to cover his alimony payments.

    After more than four decades, Ali MacGraw, 76, and Ryan O’Neal, 74, will be working together again as the lead stars of the touring production of the play, Love Letters. The story chronicles the lives of two friends who keep in touch through mail.

    “I think it’ll be interesting to see Ali and I together again,” O’Neal says in a promotional video for the play which was written by A.R. Gurney. “I think that’s certainly interesting to me. It’s a very well-written story, and I think they will be moved.”

    MacGraw believes the on-screen chemistry she shared with her co-star more than 40 years ago will still work in the play. “I can’t imagine doing this with anyone else,” the actress said. “We have 40-some-odd years of history.”

    In the promo clip for the tour, Ali MacGraw recalled her Love Story days: “Every single minute was fun and caring, and that doesn’t happen a lot.”

  • Yahoo Reports Earnings, Will Reduce Staff by 15%

    Yahoo Reports Earnings, Will Reduce Staff by 15%

    Yahoo just announced its Q4 and year-end 2015 financials and provided an update on the company’s business strategy going forward. It also it will reduce its workforce by 15% and exit five of its offices ( Dubai, Mexico City, Buenos Aires, Madrid, and Milan).

    By the end of the year, the company expects to have about 9,000 employees and fewer than 1,000 contractors. This, it says, will result in savings in short term operating expense of $400 million annually.

    “Today, we’re announcing a strategic plan that we strongly believe will enable us to accelerate Yahoo’s transformation,” said CEO Marissa Mayer. “This is a strong plan calling for bold shifts in products and in resources. We are extremely proud of the billion dollar plus business we have built in mobile, video, native, and social. Our strategic bets in Mavens have enabled us build an entirely new, forward-leaning business of tremendous scale and growth in just three years. The plan announced today builds from that achievement and will dramatically brighten our future and improve our competitiveness, and attractiveness to users, advertisers, and partners.”

    “The Board is committed to the turnaround efforts of the management team and supportive of the plan announced today. We have tremendous respect for the thousands of Yahoos who work very hard to make the world a better place,” said Maynard Webb, Yahoo’s Chairman of the Board. “The Board also believes that exploring additional strategic alternatives, in parallel to the execution of the management plan, is in the best interest of our shareholders. Separating our Alibaba stake from our operating business continues to be a primary focus, and our most direct path to value maximization. In addition to continuing work on the reverse spin, which we’ve discussed previously, we will engage on qualified strategic proposals.”

    Here’s the four-part “strategic plan” Yahoo has laid out for its business:

    yahooplan
    For Q4, the company reported revenue of $1.27 billion and EPS of $0.13, beating expectations on revenue and meeting them on earnings.

    Here’s the earnings release in its entirety:

    SUNNYVALE, Calif.–(BUSINESS WIRE)–

    Yahoo! Inc. (YHOO) today reported results for the quarter and full year ended December 31, 2015.

    Q4 2014 Q4 2015 Full Year 2014 Full Year 2015
    GAAP revenue $1,253 million $1,273 million $4,618 million $4,968 million
    Cost of revenue – TAC $74 million $271 million $218 million $878 million

    Goodwill impairment*

    		 $88 million $4,461 million $88 million $4,461 million
    Income (loss) from operations $32 million ($4,530) million $143 million ($4,748) million
    Non-GAAP income from operations $256 million $63 million $755 million $342 million
    Adjusted EBITDA $409 million $215 million $1,362 million $952 million
    Net earnings $166 million ($4,435) million $7,522 million ($4,359) million
    GAAP net earnings per diluted share $0.17 ($4.70) $7.45 ($4.64)
    Non-GAAP net earnings per diluted share $0.30 $0.13 $1.57 $0.59

    *See further discussion related to goodwill impairment below

    “I’m pleased to report that our Q4 performance exceeded guidance across GAAP revenue, revenue ex-TAC, adjusted EBITDA, and non-GAAP Operating Income,” said Marissa Mayer, CEO of Yahoo. “We continue to be encouraged by the performance of our Mavens investments, which in 2015 alone, grew to about a third of our GAAP revenue — $1.6 billion dollars.”

    Business Highlights

    Search

    • As part of Yahoo’s efforts to move search toward a more contextual, anticipatory and assistive experience, the Company made the first in a series of ongoing updates to the Yahoo Search app. For iOS in the U.S., the Yahoo Search app experience is now more actionable and guides users to the information they need whether it’s from the Web or their inboxes. Logged in users can now see Web and email results in one place, as the app can now search across email, contacts and calendar to help them find things like package delivery notifications, hotel reservation details and upcoming events, while partnerships with companies like Yelp and OpenTable allow users to take action directly from the search results page.

    Communications

    • Yahoo unveiled the next generation of Yahoo Messenger on mobile for both iOS and Android, the Web and Yahoo Mail on desktop. Built from the ground up, the powerful new platform integrates technology and features from Flickr, Tumblr and Xobni. Built for group and 1:1 messaging, Yahoo Messenger now allows users to unsend and like messages, photos and animated GIFs quickly and easily.

    Digital Content

    • Tumblr further strengthened the way that users communicate and connect over the things they love through threaded instant Messaging available across iOS and Android apps, and on the Web.
    • Yahoo presented the first free, global live stream of an NFL game to more than 15 million viewers across the globe. This was the first time users were able to enjoy the NFL’s premium content globally without cable, authentication or TV across both Yahoo and Tumblr. More than 30 top brands partnered with Yahoo to kick off this new era of sports programming. The Company delivered the live stream with a rebuffering ratio of less than one percent.
    • Yahoo, together with launch sponsor Fidelity Investments, introduced “The Final Round,” a live weekday show on Yahoo Finance that offers insight into the most important business news of the day and what’s driving markets, and features interviews with bold-faced names like premiere guest Charles Koch from the field and in the New York studio.
    • Yahoo debuted Adrian Wojnarowski’s new weekly NBA podcast, The Vertical, with an interview with NBA Commissioner Adam Silver. The podcast debuted in advance of the January launch of Wojnarowski’s new basketball site “The Vertical” on Yahoo Sports. “The Vertical” will feature content from an elite and talented group of reporters and industry insiders.

    Fourth Quarter and Full Year 2015 Financial Highlights

    Mavens Revenue:

    Q4 2014

    		 Q4 2015 Full Year 2014 Full Year 2015
    Mavens revenue

    $

    375 million

    $

    472 million

    $

    1,148 million

    $

    1,660 million
    Non-Mavens revenue 751 million 750 million 3,022 million 2,908 million
    Total traffic-driven revenue

    $

    1,126 million

    $

    1,222 million

    $

    4,170 million

    $

    4,568 million
    Non-traffic-driven revenue

    		127 million 51 million 448 million 400 million
    GAAP revenue

    $

    1,253 million

    $

    1,273 million

    $

    4,618 million

    $

    4,968 million

    Mavens revenue represented 33 percent and 28 percent of traffic-driven revenue in the fourth quarter and full year of 2014, respectively, and increased to 39 percent and 36 percent in the fourth quarter and full year of 2015, respectively.

    Mobile Revenue:

    Q4 2014 Q4 2015 Full Year 2014 Full Year 2015
    Mobile revenue

    $

    254 million

    $

    291 million

    $

    768 million

    $

    1,048 million
    PC revenue 872 million 931 million 3,402 million 3,520 million
    Total traffic-driven revenue

    $

    1,126 million

    $

    1,222 million

    $

    4,170 million

    $

    4,568 million
    Non-traffic-driven revenue 127 million 51 million 448 million 400 million
    GAAP revenue

    $

    1,253 million

    $

    1,273 million

    $

    4,618 million

    $

    4,968 million

    Mobile revenue represented 23 percent and 18 percent of traffic-driven revenue in the fourth quarter and full year of 2014, respectively, and increased to 24 percent and 23 percent in the fourth quarter and full year of 2015, respectively.

    Gross mobile revenue for the fourth quarter of 2014 and 2015 was $413 million and $449 million, respectively. Gross mobile revenue for the full year of 2014 and 2015 was $1,261 million and $1,679 million, respectively.

    Search Revenue:

    • Gross search revenue was $866 million for the fourth quarter of 2015, a decrease of 7 percent compared to the fourth quarter of 2014. Gross search revenue was $3,612 million for the full year of 2015, an increase of 7 percent compared to the prior year.
    • GAAP search revenue was $522 million for the fourth quarter of 2015, an increase of 12 percent compared to the fourth quarter of 2014. GAAP search revenue was $2,084 million for the full year of 2015, an increase of 16 percent compared to the prior year.
    • Cost of revenue – TAC paid to search partners was $141 million for the fourth quarter of 2015, which includes TAC from the Mozilla agreement, compared to $5 million in the fourth quarter of 2014. Cost of revenue – TAC paid to search partners was $465 million for the full year of 2015, which includes TAC from the Mozilla agreement, compared to $9 million in the prior year.
    • The number of Paid Clicks decreased 10 percent compared to the fourth quarter of 2014.
    • Price-per-Click increased 3 percent compared to the fourth quarter of 2014.

    Display Revenue:

    • GAAP display revenue was $601 million for the fourth quarter of 2015, a 13 percent increase compared to the fourth quarter of 2014. GAAP display revenue was $2,074 million for the full year of 2015, an 11 percent increase compared to the prior year.
    • Cost of revenue – TAC paid to display partners was $130 million for the fourth quarter of 2015 compared to $68 million in the fourth quarter of 2014. Cost of revenue – TAC paid to display partners was $410 million for the full year of 2015 compared to $205 million in the prior year.
    • The number of Ads Sold increased 8 percent compared to the fourth quarter of 2014.
    • Price-per-Ad increased 6 percent compared to the fourth quarter of 2014.

    Goodwill Impairment:

    We recorded a $4,461 million non-cash goodwill impairment charge as a result of our annual goodwill impairment test conducted in the fourth quarter of 2015. We concluded that the carrying value of our U.S. & Canada, Europe, Latin America and Tumblr reporting units exceeded their respective estimated fair values. The goodwill impairment resulted from a combination of factors, including decreases in our market capitalization, projected operating results and estimated future cash flows.

    Cash, Cash Equivalents, and Marketable Securities:

    • Cash, cash equivalents, and marketable securities were $6.8 billion as of December 31, 2015 compared to $10.2 billion as of December 31, 2014, a decrease of $3.4 billion. In the first quarter of 2015, the Company satisfied the $3.3 billion income tax liability related to the sale of Alibaba Group ADSs in September 2014.

    “We’re encouraged that our fourth quarter results exceeded expectations in all core metrics,” said Ken Goldman, CFO of Yahoo. “As we look forward to executing a more focused strategy for the Company, this is a solid baseline for the actions we’re taking to improve performance in 2016 and beyond.”

    Live Stream

    Yahoo will live stream a video broadcast of the Company’s fourth quarter and full year 2015 financial results at 2 p.m. Pacific Time/5 p.m. Eastern Time today. The live stream will be broadcast from Yahoo’s Sunnyvale studio and will be available exclusively on Yahoo Finance at finance.yahoo.com. The Company will provide its business outlook for the first quarter of 2016 during the presentation. Supplemental financial information can be accessed through the Company’s Investor Relations website at investor.yahoo.net. The video will be archived after the event at investor.yahoo.net and will be available for 90 days following the broadcast.

    Non-GAAP Financial Measures

    This press release and its attachments include the following financial measures defined as non-GAAP financial measures by the Securities and Exchange Commission (“SEC”): gross mobile revenue; gross search revenue; revenue ex-TAC; adjusted EBITDA; non-GAAP income from operations; non-GAAP net earnings; non-GAAP net earnings per share – diluted; and free cash flow.

    Gross mobile revenue is GAAP mobile revenue plus the related revenue share with third parties. Gross search revenue is GAAP search revenue plus the related revenue share with third parties. Revenue ex-TAC is GAAP revenue less cost of revenue – TAC. Adjusted EBITDA, non-GAAP income from operations, non-GAAP net earnings, and non-GAAP net earnings per share – diluted, exclude from the most comparable GAAP financial measures certain gains, losses, and expenses that we do not believe are indicative of ongoing results, and exclude stock-based compensation expense. Adjusted EBITDA also excludes taxes, depreciation, amortization of intangible assets, other income (expense), net (which includes interest), earnings in equity interests, and net income attributable to noncontrolling interests. Free cash flow is GAAP net cash provided by (used in) operating activities (adjusted to include excess tax benefits from stock-based awards), less acquisition of property and equipment, net (i.e., acquisition of property and equipment less proceeds received from disposition of property and equipment) and dividends received from equity investees.

    These measures may be different than non-GAAP financial measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles (“GAAP”). Explanations of the Company’s non-GAAP financial measures and reconciliations of these financial measures to the GAAP financial measures the Company considers most comparable are included in the accompanying “Note to Unaudited Condensed Consolidated Financial Statements,” and “Supplemental Financial Data and GAAP to Non-GAAP Reconciliations.”

    About Yahoo

    Yahoo is a guide focused on informing, connecting, and entertaining our users. By creating highly personalized experiences for our users, we keep people connected to what matters most to them, across devices and around the world. In turn, we create value for advertisers by connecting them with the audiences that build their businesses. Yahoo is headquartered in Sunnyvale, California, and has offices located throughout the Americas, Asia Pacific (APAC) and the Europe, Middle East and Africa (EMEA) regions. For more information, visit the pressroom (pressroom.yahoo.net) or the Company’s blog (yahoo.tumblr.com).

    “Ads Sold” consist of display ad impressions for paying advertisers on Yahoo Properties and Affiliate sites.

    “Affiliates” refers to the third-party entities that have integrated Yahoo’s advertising offerings into their websites or other offerings (those websites and other offerings, “Affiliate sites”).

    “Alibaba Group” means Alibaba Group Holding Limited. In September 2014, Alibaba Group completed its initial public offering of American Depositary Shares (“ADS”), in which Yahoo was a selling shareholder.

    “Gross mobile revenue” is GAAP mobile revenue plus the related revenue share with third parties.

    “Gross search revenue” is GAAP search revenue plus the related revenue share with third parties.

    “Mavens revenue” is revenue generated from, without duplication: (i) mobile (as defined below), (ii) video ads and video ad packages, (iii) native ads, and (iv) Tumblr ads and fees.

    “Mobile revenue” is revenue generated in connection with user activity on mobile devices, including smartphones and tablets, regardless of whether the device is accessing a mobile-optimized service. Mobile revenue is generated primarily from search and display ads. Mobile revenue also includes leads, listings and fees revenue and ecommerce revenue allocated to user activity on mobile devices.

    “Net earnings” means net income (loss) attributable to Yahoo! Inc., and “net earnings per diluted share” means net income (loss) attributable to Yahoo! Inc. common stockholders per share – diluted.

    “Non-Mavens revenue” is revenue generated from search ads and traditional (i.e., non-native, non-video, non-Tumblr) display ads served on PCs and also includes leads, listings and fees revenue and ecommerce revenue allocated to user activity on PCs.

    “Non-traffic-driven revenue” is revenue not arising from user activity on Yahoo Properties or Affiliate sites, and includes royalty revenue, license fee revenue, amortization under the technology and intellectual property license agreement with Alibaba Group through the third quarter of 2015, and all other revenue that is not traffic-driven.

    “Paid Clicks” are clicks by end-users on sponsored search listings (excluding native ads) on Yahoo Properties and Affiliate sites.

    “PC” means a desktop computer, and “PC revenue” is revenue generated from search and display ads served on PCs and also includes leads, listings and fees revenue and ecommerce revenue allocated to user activity on PCs.

    “Price-per-Ad” is defined as display revenue divided by our total number of Ads Sold.

    “Price-per-Click” is defined as Search click-driven revenue divided by our total number of Paid Clicks.

    “Search Agreement” refers to the Search and Advertising Services and Sales Agreement between Yahoo and Microsoft Corporation, as amended.

    “Search click-driven revenue” is gross search revenue excluding the Microsoft RPS guarantee and search revenue from Yahoo Japan.

    “TAC” refers to traffic acquisition costs. TAC consists of payments to Affiliates and payments made to companies that direct consumer and business traffic to Yahoo Properties.

    “Yahoo,” “Company,” and “we” refer to Yahoo! Inc. and its consolidated subsidiaries.

    “Yahoo Properties” refers to the online properties and services that Yahoo provides to users.

    We periodically review, refine and update our methodologies for monitoring, gathering, and counting number of Ads Sold and Paid Clicks, and for calculating Search click-driven revenue, Price-per-Ad, and Price-per-Click.

    Additional information about how “Ads Sold,” “Paid Clicks,” “Price-per-Ad,” “Price-per-Click,” and “Search click-driven revenue” are defined and calculated is included under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, which is on file with the SEC and available on the SEC’s website at www.sec.gov.

    This press release contains forward-looking statements concerning Yahoo’s expected financial performance and Yahoo’s strategic and operational plans (including, without limitation, the quotations from management). Risks and uncertainties may cause actual results to differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, risks related to acceptance by users of new products and services; risks related to Yahoo’s ability to compete with new or existing competitors; reduction in spending by, or loss of, advertising customers; risks related to Yahoo’s ability to continue to grow its mobile users and revenue; risks related to Yahoo’s ability to continue to grow Mavens revenue; risks related to Yahoo’s ability to provide innovative search experiences and other products and services that differentiate its services and generate significant traffic; risks associated with the Search Agreement with Microsoft Corporation; risks related to acquiring or developing compelling content; risks related to joint ventures and the integration of acquisitions; risks related to possible impairment of goodwill or other assets; risks related to Yahoo’s ability to manage its operating expenses effectively; risks related to Yahoo’s ability to protect its intellectual property and the value of its brands; adverse results in litigation; security breaches; interruptions or delays in the provision of Yahoo’s services; risks related to Yahoo’s regulatory environment; risks related to fluctuations in foreign currency exchange rates; risks related to Yahoo’s international operations; risks related to Yahoo’s ability to recruit and retain key personnel; dependence on third parties for technology, services, content, and distribution; risks related to the calculation of our key operational metrics; and general economic conditions. All information set forth in this press release and its attachments is as of February 2, 2016. Yahoo does not intend, and undertakes no duty, to update this information to reflect subsequent events or circumstances. More information about potential factors that could affect the Company’s business and financial results is included under the captions “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 for the year ended December 31, 2014, as amended, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, which are on file with the SEC and available on the SEC’s website at www.sec.gov. Additional information will also be set forth in those sections in Yahoo’s Annual Report on Form 10-K for the year ended December 31, 2015, which will be filed with the SEC in the first quarter of 2016.

    Yahoo!, the Yahoo family of marks, Flickr, Xobni, and the associated logos are trademarks and/or registered trademarks of Yahoo! Inc. Tumblr is a registered trademark of Tumblr, Inc. Other names are trademarks and/or registered trademarks of their respective owners.

    Yahoo! Inc.
    Unaudited Condensed Consolidated Balance Sheets
    (in thousands)

    December 31,

    December 31,

    2014

    2015
    ASSETS
    Current assets:
    Cash and cash equivalents $ 2,664,098 $ 1,631,911
    Short-term marketable securities 5,327,412 4,225,112
    Accounts receivable, net 1,032,704 1,047,504
    Prepaid expenses and other current assets 420,207 602,792
    Total current assets 9,444,421 7,507,319
    Long-term marketable securities 2,230,892 975,961
    Property and equipment, net 1,487,684 1,547,323
    Goodwill 5,152,570 808,114
    Intangible assets, net 470,842 347,269
    Other long-term assets and investments 563,560 342,390
    Investments in Alibaba Group 39,867,789 31,172,361
    Investments in equity interests 2,489,578 2,503,229
    Total assets $ 61,707,336 $ 45,203,966
    LIABILITIES AND EQUITY
    Current liabilities:
    Accounts payable $ 238,018 $ 208,691
    Income taxes payable related to sale of Alibaba Group ADSs 3,282,293 –
    Other accrued expenses and current liabilities 657,709 934,658
    Deferred revenue 336,963 134,031
    Total current liabilities 4,514,983 1,277,380
    Convertible notes 1,170,423 1,233,485
    Long-term deferred revenue 20,774 27,801
    Other long-term liabilities 143,095 118,689
    Deferred tax liabilities related to investment in Alibaba Group 16,154,906 12,611,867
    Deferred and other long-term tax liabilities 917,563 855,324
    Total liabilities 22,921,744 16,124,546
    Total Yahoo! Inc. stockholders’ equity 38,741,837 29,043,537
    Noncontrolling interests 43,755 35,883
    Total equity 38,785,592 29,079,420
    Total liabilities and equity $ 61,707,336 $ 45,203,966
    Yahoo! Inc.
    Unaudited Condensed Consolidated Statements of Operations
    (in thousands, except per share amounts)

    Three Months Ended

    Year Ended

    December 31,

    December 31,

    2014

    2015

    2014

    2015
    Revenue $ 1,253,072 $ 1,273,393 $ 4,618,133 $ 4,968,301
    Operating expenses:
    Cost of revenue – traffic acquisition costs 73,616 270,916 217,531 877,514
    Cost of revenue – other 287,808 316,193 1,169,844 1,200,234

    Sales and marketing

    		 261,040 256,728 1,084,438 1,080,718
    Product development 304,287 272,463 1,156,386 1,177,923
    General and administrative 190,051 181,733 686,272 687,804
    Amortization of intangibles 17,924 19,365 66,750 79,042
    Gain on sale of patents (35,094 ) – (97,894 ) (11,100 )
    Asset impairment charge – 2,682 – 44,381
    Goodwill impairment charge 88,414 4,460,837 88,414 4,460,837
    Intangibles impairment charge – 15,423 – 15,423
    Restructuring charges, net 32,872 7,087 103,450 104,019
    Total operating expenses

    1,220,918

    		 5,803,427 4,475,191 9,716,795
    Income (loss) from operations 32,154 (4,530,034 ) 142,942 (4,748,494 )
    Other income (expense), net 87,550 (9,023 ) 10,369,439 (75,782 )
    Income (loss) before income taxes and earnings in equity interests 119,704 (4,539,057 ) 10,512,381 (4,824,276 )
    (Provision) benefit for income taxes (52,340 ) 13,985 (4,038,102 ) 89,598
    Earnings in equity interests 101,917 92,845 1,057,863 383,571
    Net income (loss) 169,281 (4,432,227 ) 7,532,142 (4,351,107 )
    Less: Net income attributable to noncontrolling interests (2,937 ) (2,760 ) (10,411 ) (7,975 )
    Net income (loss) attributable to Yahoo! Inc. $ 166,344 $ (4,434,987 ) $ 7,521,731 $ (4,359,082 )
    Net income (loss) attributable to Yahoo! Inc. common stockholders per share – diluted (1) $ 0.17 $ (4.70 ) $ 7.45 $ (4.64 )
    Shares used in per share calculation – diluted 962,626 943,425 1,004,108 939,141
    Stock-based compensation expense by function:
    Cost of revenue – other $ 6,331 $ 9,053 $ 42,155 $ 32,010
    Sales and marketing 32,209 30,002 145,777 141,418
    Product development 44,839 45,010 139,056 190,454
    General and administrative 19,373 21,836 93,186 93,271
    Restructuring charges, net – – – 2,705

    Supplemental Financial Data:
    Revenue ex-TAC $ 1,179,456 $ 1,002,477 $ 4,400,602 $ 4,090,787
    Adjusted EBITDA $ 409,222 $ 214,687 $ 1,361,548 $ 951,740
    Free cash flow(2) $ 74,525 $ 31,502 $ 586,632 $ (3,010,172 )
    (1) The impact of outstanding stock awards of entities in which the Company holds equity interests that are accounted for using the equity method reduced the Company’s diluted earnings per share by $0.04 for the year ended December 31, 2014.
    (2) During the year ended December 31, 2015, the Company satisfied the $3.3 billion income tax liability related to the sale of Alibaba Group ADSs in September 2014.
    Yahoo! Inc.
    Unaudited Condensed Consolidated Statements of Cash Flows
    (in thousands)
    Three Months Ended Year Ended
    December 31, December 31,
    2014 2015 2014 2015
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss) $ 169,281 $ (4,432,227 ) $ 7,532,142 $ (4,351,107 )

    Adjustments to reconcile net income to net cash provided by (used in) operating activities:
    Depreciation 118,454 117,354 475,031 472,894
    Amortization of intangible assets 34,576 34,629 131,537 136,719
    Accretion of convertible notes discount 15,255 16,077 59,838 63,061
    Stock-based compensation expense 102,752 105,901 420,174 459,858
    Non-cash asset impairment charge – 2,682 – 44,381
    Non-cash goodwill impairment charge 88,414 4,460,837 88,414 4,460,837
    Non-cash intangibles impairment charge – 15,423 – 15,423
    Non-cash restructuring (credits) charges 3,637 3,181 (3,394 ) 3,150
    Non-cash accretion (amortization) on marketable securities 5,763 8,890 30,878 47,218
    Foreign exchange (gain) loss 3,271 (5,961 ) 15,978 4,376
    (Gain) loss on sale of assets and other (1,411 ) 180 (11,383 ) (2,878 )
    Gain on sale of Alibaba Group ADSs – – (10,319,437 ) –
    Gain on sale of patents (35,094 ) – (97,894 ) (11,100 )
    (Gain) loss on Hortonworks warrants (98,062 ) (42 ) (98,062 ) 19,199
    Earnings in equity interests (101,917 ) (92,845 ) (1,057,863 ) (383,571 )
    Tax benefits from stock-based awards 34,649 18,739 145,711 41,729
    Excess tax benefits from stock-based awards (35,190 ) (24,923 ) (149,582 ) (58,282 )
    Deferred income taxes 68,458 10,264 465,873 (42,341 )
    Dividends received from equity investees – – 83,685 142,045
    Changes in assets and liabilities, net of effects of acquisitions:
    Accounts receivable (113,370 ) (73,368 ) 29,278 (39,065 )
    Prepaid expenses and other assets (103,477 ) 85,954 (82,419 ) 21,842
    Accounts payable 14,475 (30,323 ) 14,165 (59,965 )
    Accrued expenses and other liabilities 12,821 (84,793 ) 132,839 133,244
    Income taxes payable related to sale of Alibaba Group ADSs – – 3,282,293 (3,282,293 )
    Deferred revenue (76,070 ) (3,339 ) (194,920 ) (195,328 )
    Net cash provided by (used in) operating activities 107,215 132,290 892,882 (2,359,954 )
    CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisition of property and equipment (70,276 ) (125,818 ) (389,551 ) (577,631 )
    Proceeds from sales of property and equipment 2,396 107 17,404 11,176
    Purchases of marketable securities (6,327,504 ) (1,733,658 ) (7,890,092 ) (5,206,245 )
    Proceeds from sales of marketable securities 587,924 256,676 2,269,659 822,997
    Proceeds from maturities of marketable securities 76,740 1,802,208 945,696 6,691,645
    Proceeds from sale of Alibaba Group ADSs, net of underwriting discounts, commissions, and fees – – 9,404,974 –
    Purchases of intangible assets (178 ) (78 ) (2,658 ) (4,811 )
    Proceeds from sales of patents 23,500 – 86,300 29,100
    Proceeds from the settlement of derivative hedge contracts 68,417 26,497 254,496 147,179
    Payments for the settlement of derivative hedge contracts (236 ) (2,223 ) (5,454 ) (8,817 )
    Acquisitions, net of cash acquired (545,199 ) (1,063 ) (859,036 ) (175,693 )
    Payments for equity investments in privately held companies (14,000 ) – (74,399 ) –
    Other investing activities, net 3,391 (53 ) 4,630 (256 )
    Net cash provided by (used in) investing activities (6,195,025 ) 222,595 3,761,969 1,728,644
    CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock 60,461 6,833 308,029 59,130
    Repurchases of common stock (1,612,995 ) – (4,163,227 ) (203,771 )
    Excess tax benefits from stock-based awards 35,190 24,923 149,582 58,282
    Tax withholdings related to net share settlements of restricted stock units (54,454 ) (41,670 ) (280,879 ) (257,731 )
    Distributions to noncontrolling interests – – (22,344 ) (15,847 )
    Other financing activities, net (4,387 ) (3,767 ) (13,627 ) (17,321 )
    Net cash used in financing activities (1,576,185 ) (13,681 ) (4,022,466 ) (377,258 )
    Effect of exchange rate changes on cash and cash equivalents (17,192 ) 9,547 (45,877 ) (23,619 )
    Net change in cash and cash equivalents (7,681,187 ) 350,751 586,508 (1,032,187 )
    Cash and cash equivalents, beginning of period 10,345,285 1,281,160 2,077,590 2,664,098
    Cash and cash equivalents, end of period $ 2,664,098 $ 1,631,911 $ 2,664,098 $ 1,631,911

    Yahoo! Inc.
    Note to Unaudited Condensed Consolidated Financial Statements

    This press release and its attachments include the non-GAAP financial measures of revenue excluding traffic acquisition costs (“revenue ex-TAC”); gross mobile revenue; gross search revenue; adjusted EBITDA; non-GAAP income from operations; non-GAAP net earnings; non-GAAP net earnings per diluted share; and free cash flow, which are reconciled to revenue (in the case of revenue ex-TAC, gross mobile revenue, and gross search revenue); net income (loss) attributable to Yahoo! Inc. (in the case of adjusted EBITDA and non-GAAP net earnings); income (loss) from operations; net income (loss) attributable to Yahoo! Inc. common stockholders per share – diluted; and net cash provided by (used in) operating activities, which we believe are the most comparable GAAP measures. Yahoo! Inc. (together with its consolidated subsidiaries, “Yahoo,” the “Company,” or “we”) uses these non-GAAP financial measures for internal managerial purposes and to facilitate period-to-period comparisons. We describe limitations specific to each non-GAAP financial measure below. Management generally compensates for limitations in the use of non-GAAP financial measures by relying on comparable GAAP financial measures and providing investors with a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure or measures. Further, management uses non-GAAP financial measures only in addition to and in conjunction with results presented in accordance with GAAP. We believe that these non-GAAP financial measures reflect additional ways of viewing aspects of our operations that, when viewed with our GAAP results, provide a more complete understanding of factors and trends affecting our business. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, revenue, net income (loss) attributable to Yahoo! Inc., income (loss) from operations, net income (loss) attributable to Yahoo! Inc. common stockholders per share – diluted, and net cash provided by (used in) operating activities calculated in accordance with GAAP.

    Revenue ex-TAC is a non-GAAP financial measure defined as GAAP revenue less TAC that has been recorded as a cost of revenue. TAC consists of payments made to Affiliates, and payments made to companies that direct consumer and business traffic to Yahoo Properties. TAC is recorded either as a reduction of revenue or as cost of revenue. We present revenue ex-TAC to provide investors a metric used by the Company for evaluation and decision-making purposes and to provide investors with comparable revenue numbers when comparing to our historical reported financial information. A limitation of revenue ex-TAC is that it is a measure we defined for internal and investor purposes that may be unique to the Company, and therefore it may not enhance the comparability of our results to those of other companies in our industry who have similar business arrangements but address the impact of TAC differently. Management compensates for these limitations by also relying on the comparable GAAP financial measures of revenue and cost of revenue—TAC.

    Each of gross mobile revenue and gross search revenue is a non-GAAP financial measure. Gross mobile revenue is defined as GAAP mobile revenue plus the related revenue share with third parties. Gross search revenue is defined as GAAP search revenue plus the related revenue share with third parties. We present these amounts to provide investors with additional metrics used by the Company for evaluation and decision-making purposes and as an indicator of the size of our presence in the relevant business. To this end, gross mobile revenue and gross search revenue report the total receipts generated on Yahoo Properties and Affiliate sites by the specified relevant Yahoo business (i.e., mobile or search), before any TAC or other revenue share is paid to the Affiliates and before any revenue share is allocated to Microsoft or other parties. A limitation of these non-GAAP measures is that they include revenue that is recognized by one or more third parties and not by Yahoo; furthermore, they are measures we defined for internal and investor purposes that may be unique to us, and therefore may not enhance the comparability of our results to those of other companies in our industry who have similar business arrangements but address the impact of TAC and revenue sharing differently. Management compensates for these limitations by also relying on the comparable financial measure GAAP revenue.

    Adjusted EBITDA is defined as net income (loss) attributable to Yahoo! Inc. before taxes, depreciation, amortization of intangible assets, stock-based compensation expense, other income, net (which includes interest), earnings in equity interests, net income attributable to noncontrolling interests and other gains, losses, and expenses that we do not believe are indicative of our ongoing results. We present adjusted EBITDA because the exclusion of certain gains, losses, and expenses facilitates comparisons of the operating performance of the Company on a period to period basis. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for results reported under GAAP. These limitations include: adjusted EBITDA does not reflect tax payments and such payments reflect a reduction in cash available to us; adjusted EBITDA does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in our businesses; adjusted EBITDA does not include stock-based compensation expense related to the Company’s workforce; adjusted EBITDA also excludes other income, net (which includes interest), earnings in equity interests, net income attributable to noncontrolling interests and other gains, losses, and expenses that we do not believe are indicative of our ongoing results, and these items may represent a reduction or increase in cash available to us; and adjusted EBITDA is a measure that may be unique to the Company, and therefore it may not enhance the comparability of our results to other companies in our industry. Management compensates for these limitations by also relying on the comparable GAAP financial measure of net income (loss) attributable to Yahoo! Inc., which includes taxes, depreciation, amortization, stock-based compensation expense, other income, net (which includes interest), earnings in equity interests, net income attributable to noncontrolling interests and the other gains, losses and expenses that are excluded from adjusted EBITDA.

    Non-GAAP income from operations is defined as income (loss) from operations excluding certain gains, losses, and expenses that we do not believe are indicative of our ongoing operating results and further adjusted to exclude stock-based compensation expense. Because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, and the subjective assumptions involved in those determinations, we believe excluding stock-based compensation expense enhances the ability of management and investors to understand the impact of stock-based compensation expense on income (loss) from operations. We consider non-GAAP income from operations to be a profitability measure which facilitates the forecasting of our operating results for future periods and allows for the comparison of our results to historical periods. A limitation of non-GAAP income from operations is that it does not include all items that impact our income from operations for the period. Management compensates for this limitation by also relying on the comparable GAAP financial measure of income (loss) from operations which includes the gains, losses, and expenses that are excluded from non-GAAP income from operations.

    Non-GAAP net earnings is defined as net income (loss) attributable to Yahoo! Inc. (which we sometimes refer to as net earnings) excluding certain gains, losses, expenses, and their related tax effects that we do not believe are indicative of our ongoing results and further adjusted to exclude stock-based compensation expense and its related tax effects. Because of the variety of equity awards used by companies, the varying methodologies for determining stock-based compensation expense, and the subjective assumptions involved in those determinations, we believe excluding stock-based compensation expense enhances the ability of management and investors to understand the impact of stock-based compensation expense on net income and net income per share. We consider non-GAAP net earnings and non-GAAP net earnings per diluted share to be profitability measures which facilitate the forecasting of our results for future periods and allow for the comparison of our results to historical periods. A limitation of non-GAAP net earnings and non-GAAP net earnings per diluted share is that they do not include all items that impact our net income and net income per diluted share for the period. Management compensates for this limitation by also relying on the comparable GAAP financial measures of net income (loss) attributable to Yahoo! Inc. and net income (loss) attributable to Yahoo! Inc. common stockholders per share – diluted, both of which include the gains, losses, expenses and related tax effects that are excluded from non-GAAP net earnings and non-GAAP net earnings per diluted share.

    Free cash flow is a non-GAAP financial measure defined as net cash provided by (used in) operating activities (adjusted to include excess tax benefits from stock-based awards), less acquisition of property and equipment, net (i.e., acquisition of property and equipment less proceeds received from disposition of property and equipment) and dividends received from equity investees. We consider free cash flow to be a liquidity measure which provides useful information to management and investors about the amount of cash generated by business operations, after deducting our net payments for acquisitions and dispositions of property and equipment, which cash can then be used for strategic opportunities or other business purposes including, among others, investing in the Company’s business, making strategic acquisitions, strengthening the balance sheet, and repurchasing stock. A limitation of free cash flow is that it does not represent the total increase or decrease in the cash balance for the period. Management compensates for this limitation by also relying on the net change in cash and cash equivalents as presented in the Company’s unaudited condensed consolidated statements of cash flows prepared in accordance with GAAP which incorporates all cash movements during the period.

    Yahoo! Inc.
    Supplemental Financial Data and GAAP to Non-GAAP Reconciliations
    (in thousands)
    Three Months Ended Year Ended
    December 31, December 31,
    2014 2015 2014 2015
    Revenue for groups of similar services:
    Search $ 467,321 $ 521,869 $ 1,792,861 $ 2,084,139
    Display 531,778 601,435 1,868,035 2,074,161
    Other 253,973 150,089 957,237 810,001
    Total revenue $ 1,253,072 $ 1,273,393 $ 4,618,133 $ 4,968,301
    Revenue excluding traffic acquisition costs recorded as cost of revenue (“revenue ex-TAC”) for groups of similar services:
    GAAP search revenue $ 467,321 $ 521,869 $ 1,792,861 $ 2,084,139
    TAC associated with search revenue (5,096 ) (140,596 ) (9,279 ) (465,484 )
    Search revenue ex-TAC $ 462,225 $ 381,273 $ 1,783,582 $ 1,618,655
    GAAP display revenue $ 531,778 $ 601,435 $ 1,868,035 $ 2,074,161
    TAC associated with display revenue (67,772 ) (129,756 ) (204,928 ) (409,590 )
    Display revenue ex-TAC $ 464,006 $ 471,679 $ 1,663,107 $ 1,664,571
    Other GAAP revenue $ 253,973 $ 150,089 $ 957,237 $ 810,001
    TAC associated with other GAAP revenue (748 ) (564 ) (3,324 ) (2,440 )
    Other revenue ex-TAC $ 253,225 $ 149,525 $ 953,913 $ 807,561
    Revenue ex-TAC:
    GAAP revenue $ 1,253,072 $ 1,273,393 $ 4,618,133 $ 4,968,301
    TAC (73,616 ) (270,916 ) (217,531 ) (877,514 )
    Revenue ex-TAC $ 1,179,456 $ 1,002,477 $ 4,400,602 $ 4,090,787
    Revenue ex-TAC by segment:
    Americas:
    GAAP revenue $ 972,092 $ 1,012,465 $ 3,517,861 $ 3,976,770
    TAC (59,548 ) (239,393 ) (166,545 ) (788,725 )
    Revenue ex-TAC $ 912,544 $ 773,072 $ 3,351,316 $ 3,188,045
    EMEA:
    GAAP revenue $ 96,358 $ 97,116 $ 374,833 $ 343,646
    TAC (9,482 ) (19,885 ) (36,867 ) (57,284 )
    Revenue ex-TAC $ 86,876 $ 77,231 $ 337,966 $ 286,362
    Asia Pacific:
    GAAP revenue $ 184,622 $ 163,812 $ 725,439 $ 647,885
    TAC (4,586 ) (11,638 ) (14,119 ) (31,505 )
    Revenue ex-TAC $ 180,036 $ 152,174 $ 711,320 $ 616,380
    Total revenue ex-TAC $ 1,179,456 $ 1,002,477 $ 4,400,602 $ 4,090,787
    Direct costs by segment (3):
    Americas $ 70,594 $ 79,338 $ 283,594 $ 319,744
    EMEA 20,985 31,842 87,490 95,789
    Asia Pacific 49,989 46,290 198,910 196,054
    Global operating costs (4) 663,760 631,128 2,566,954 2,547,368
    Gain on sale of patents (35,094 ) – (97,894 ) (11,100 )
    Asset impairment charge – 2,682 – 44,381
    Goodwill impairment charge 88,414 4,460,837 88,414 4,460,837

    Intangibles impairment charge

    –

    15,423

    –

    15,423
    Restructuring charges, net 32,872 7,087 103,450 104,019
    Depreciation and amortization 153,030 151,983 606,568 609,613
    Stock-based compensation expense 102,752 105,901 420,174 457,153
    Income (loss) from operations $ 32,154 $ (4,530,034 ) $ 142,942 $ (4,748,494 )
    (3) Direct costs for each segment include costs associated with the local sales teams and other cost of revenue.
    (4) Global operating costs include product development, marketing, real estate workplace, general and administrative, and other corporate expenses that are managed on a global basis and that are not directly attributable to any particular segment.
    Yahoo! Inc.
    Supplemental Financial Data and GAAP to Non-GAAP Reconciliations (continued)
    (in thousands)
    Three Months Ended Year Ended
    December 31, December 31,
    2014 2015 2014 2015
    Reconciliation of net income (loss) attributable to Yahoo! Inc. to adjusted EBITDA:
    Net income (loss) attributable to Yahoo! Inc. $ 166,344 $ (4,434,987 ) $ 7,521,731 $ (4,359,082 )
    Advisory fees – 808 – 8,808
    Depreciation and amortization 153,030 151,983 606,568 609,613
    Stock-based compensation expense 102,752 105,901 420,174 457,153
    Asset impairment charge – 2,682 – 44,381
    Goodwill impairment charge 88,414 4,460,837 88,414 4,460,837
    Intangibles impairment charge – 15,423 – 15,423
    Restructuring charges, net 32,872 7,087 103,450 104,019
    Other (expense) income, net (87,550 ) 9,023 (10,369,439 ) 75,782
    (Provision) benefit for income taxes 52,340 (13,985 ) 4,038,102 (89,598 )
    Earnings in equity interests (101,917 ) (92,845 ) (1,057,863 ) (383,571 )
    Net income attributable to noncontrolling interests 2,937 2,760 10,411 7,975
    Adjusted EBITDA $ 409,222 $ 214,687 $ 1,361,548 $ 951,740
    Reconciliation of net cash provided by (used in) operating activities to free cash flow:
    Net cash provided by (used in) operating activities $ 107,215 $ 132,290 $ 892,882 $ (2,359,954 )
    Acquisition of property and equipment, net (67,880 ) (125,711 ) (372,147 ) (566,455 )
    Dividends received from equity investees – – (83,685 ) (142,045 )
    Excess tax benefits from stock-based awards 35,190 24,923 149,582 58,282
    Free cash flow(2) $ 74,525 $ 31,502 $ 586,632 $ (3,010,172 )
    Three Months Ended Year Ended
    December 31, December 31,
    2014 2015 2014 2015
    Reconciliation of GAAP mobile revenue to gross mobile revenue:
    GAAP mobile revenue $ 253,755 $ 290,756 $ 767,998 $ 1,047,539
    Revenue share with third parties 158,840 158,338 492,919 631,744
    Gross mobile revenue $ 412,595 $ 449,094 $ 1,260,917 $ 1,679,283
    Reconciliation of GAAP search revenue to gross search revenue:
    GAAP search revenue $ 467,321 $ 521,869 $ 1,792,861 $ 2,084,139
    Revenue share with third parties 464,758 344,345 1,588,754 1,527,624
    Gross search revenue $ 932,079 $ 866,214 $ 3,381,615 $ 3,611,763
    (2) During the year ended December 31, 2015, the Company satisfied the $3.3 billion income tax liability related to the sale of Alibaba Group ADSs in September 2014.
    Yahoo! Inc.
    GAAP to Non-GAAP Reconciliations (continued)
    (in thousands, except per share amounts)

    Three Months Ended
    December 31,
    2014 2015
    GAAP income (loss) from operations $ 32,154 $ (4,530,034 )
    (a) Restructuring charges, net 32,872 7,087
    (b) Stock-based compensation expense 102,752 105,901
    (c) Asset impairment charge – 2,682
    (d) Goodwill impairment charge 88,414 4,460,837
    (e) Intangibles impairment charge – 15,423
    (f) Advisory fees – 808
    Non-GAAP income from operations $ 256,192 $ 62,704
    GAAP net income (loss) attributable to Yahoo! Inc. $ 166,344 $ (4,434,987 )
    (a) Restructuring charges, net 32,872 7,087
    (b) Stock-based compensation expense 102,752 105,901
    (c) Gain on Hortonworks warrants (98,062 ) (42 )
    (d) Asset impairment charge – 2,682
    (e) Goodwill impairment charge 88,414 4,460,837
    (f) Intangibles impairment charge – 15,423
    (g) Advisory fees – 808
    (h) To adjust the provision for income taxes to reflect an effective tax rate of 35% for the three months ended December 31, 2015 and to exclude the tax impact of items (a) through (g) above for the three months ended December 31, 2014 1,124 (32,759 )
    Non-GAAP net earnings $ 293,444 $ 124,950
    GAAP net income (loss) attributable to Yahoo! Inc. common stockholders per share – diluted $ 0.17 $ (4.70 )
    Non-GAAP net earnings per share – diluted $ 0.30 $ 0.13
    Shares used in non-GAAP per share calculation – diluted 962,626 949,758
    Year Ended
    December 31,
    2014 2015
    GAAP income (loss) from operations $ 142,942 $ (4,748,494 )
    (a) Restructuring charges, net 103,450 104,019
    (b) Stock-based compensation 420,174 457,153
    (c) Advisory fees – 8,808
    (d) Asset impairment charge – 44,381
    (e) Goodwill impairment charge 88,414 4,460,837
    (f) Intangibles impairment charge – 15,423
    Non-GAAP income from operations $ 754,980 $ 342,127
    GAAP net income (loss) attributable to Yahoo! Inc. $ 7,521,731 $ (4,359,082 )
    (a) Restructuring charges, net 103,450 104,019
    (b) Stock-based compensation 420,174 457,153
    (c) Advisory fees – 8,808
    (d) (Gain) loss on Hortonworks warrants (98,062 ) 19,199
    (e) Asset impairment charge – 44,381
    (f) Goodwill impairment charge 88,414 4,460,837
    (g) Intangibles impairment charge – 15,423
    (h) Gain related to sale of Alibaba Group ADSs (10,319,437 ) –
    (i) To adjust the provision for income taxes to reflect an effective tax rate of 35% in the year ended December 31, 2015 and to exclude the tax impact of items (a) through (h) above for the year ended December 31, 2014 3,903,951 (189,538 )
    Non-GAAP net earnings $ 1,620,221 $ 561,200
    GAAP net income (loss) attributable to Yahoo! Inc. common stockholders per share – diluted (1) $ 7.45 $ (4.64 )
    Non-GAAP net earnings per share – diluted (5) $ 1.57 $ 0.59
    Shares used in non-GAAP per share calculation – diluted 1,004,108 948,111
    (1) The impact of outstanding stock awards of entities in which the Company holds equity interests that are accounted for using the equity method reduced the Company’s diluted earnings per share by $0.04 for the year ended December 31, 2014.
    (5) The impact of outstanding stock awards of entities in which the Company holds equity interests that are accounted for using the equity method reduced the Company’s non-GAAP diluted earnings per share by $0.04 for the year ended December 31, 2014.


    Images via Wikimedia Commons, Yahoo

  • Ali MacGraw and Ryan O’Neal, the Stars of the Iconic ’70s Film ‘Love Story’ Swap Stories At Harvard University

    Ali MacGraw and Ryan O’Neal who proved that “love means never having to say you’re sorry” swapped stories at the university that served as the setting for their iconic film, Love Story.

    According to Page Six, one revelation shared was just how little MacGraw was paid — $20,000 — for playing Jenny.

    The actress shared this while reminiscing with O’Neal about the movie at Harvard University on Monday.

    MacGraw said she didn’t complain because the pay was a “lot of money” for her in those days. O’Neal joked that his salary didn’t even cover his alimony payments to Leigh Taylor-Young, whom he divorced in 1973.

    The film chronicles the love story of a rich boy and a girl from the other side of the tracks, from their collegiate days at Harvard University to her tragic death to cancer at the age of 25. The film made grown men weep.

    MacGraw and O’Neal visited Harvard some 45 years after the film was released and spoke with students about their memories of their time on campus filming the classic movie.

    MacGraw said being at Harvard brought back fond memories that few of her subsequent experiences in film ever matched.

    “It was a wonderful, wonderful adventure that was followed by some pretty dramatic stuff in my private life,” she noted,

    MacGraw, who dealt with addiction for years, walked away from acting in the years after her breakout role in Love Story, which was a huge box office success that received seven Academy Award nominations.

    O’Neal shared that cancer has played a big part in his life – as it had for his character in the movie. He recently battled leukaemia, but the disease is now in remission.

    He also alluded to the death of his long-time companion, actress Farrah Fawcett, who died of cancer in 2009.

  • For Buisnesses, More to Come with Facebook Messenger

    For Buisnesses, More to Come with Facebook Messenger

    Last year at its F8 conference, Facebook introduced business features for Messenger, though so far, things have been pretty limited. The ecommerce businesses that have been using it, however, have been happy with it so far. That is according to Mark Zuckerberg.

    Are you looking forward to more business feature availability for Messenger? Do you think it’s something your customers would like? Let us know in the comments.

    Facebook reported its earnings on Wednesday, and the subject of Messenger came up a few times throughout the ensuing earnings call.

    “With Messenger and WhatsApp, we’ve continued to make progress with building these into valuable communication services for everyone in the world,” Zuckerberg said in his prepared remarks (via Seeking Alpha’s transcript). “More than 800 million people now use Messenger monthly and in 2015 we grew that number by almost a quarter of 1 billion while also increasing engagement. We continue to give people new ways to communicate by introducing video calling and new options for customizing conversations with fun things like colors and emojis and by using apps like — using apps, the Messenger platform.”

    “We also worked to extend Messenger’s utility by adding payments, a new way to connect with businesses and by testing M, a digital assistant powered by AI,” he said. “In this quarter we also began testing a transportation platform, allowing people to request an Uber ride through Messenger. More services will be coming to the platform soon, including airlines.”

    It’s going to be particularly interesting to see what other kinds of services Facebook integrates here as time goes on. One can imagine this type of thing extending well beyond travel-related services.

    “On Messenger, the platform efforts in 2015 focused on two things,” Zuckerberg later said during a Q&A. “One was expanding the different types of content that people could share in Messenger. And that diversity is going really well. And we see continued increase in video sharing and photos and stickers, and a lot of stuff that you would just call fun but that people really enjoy as different ways to express themselves. But in terms of the business, the more important piece is how people can interact with businesses through Messenger. And we started some early small tests around f8 last year where with some ecommerce services made it so that people who were buying things could follow up with the business and get customer support and buy more things. And we went through this process of integrating that and making sure that it’s integrated with all these system well. And I think everyone is really happy with that so far. So we started off pretty slowly, but that’s going to be some of the basis for how we look to make Messenger a business going forward. And we’re happy with the initial results. There is obviously a lot more there that we need to do and we’ll have more to talk about this year and beyond.”

    Earlier this month, Facebook put out a small infographic looking at 2015’s additions to Messenger as well as expected 2016 trends.

    According to recent data from Neilsen, Messenger is the fastest growing app in the U.S. among the top apps.

    Do you intend to use Facebook Messenger for business? Discuss.

    Image via Facebook

  • Microsoft Earnings Out, Revenue $25.7 billion

    Microsoft Earnings Out, Revenue $25.7 billion

    Microsoft just announced its earnings report for its fiscal year 2016 Q2. The company beat Wall Street expectations for revenue and earnings per share at $25.7 billion and $0.78 respectively.

    The company says its results are highlighted by its cloud strength.

    CEO Satya Nadella said, “Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas. Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices.”

    Here’s the release in its entirety:

    REDMOND, Wash. — January 28, 2016 — Microsoft Corp. today announced the following results for the quarter ended December 31, 2015:

    • Revenue was $23.8 billion GAAP, and $25.7 billion non-GAAP
    • Operating income was $6.0 billion GAAP, and $7.9 billion non-GAAP
    • Net income was $5.0 billion GAAP, and $6.3 billion non-GAAP
    • Earnings per share was $0.62 GAAP, and $0.78 non-GAAP

    During the quarter, Microsoft returned $6.5 billion to shareholders in the form of share repurchases and dividends.

    “Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas,” said Satya Nadella, chief executive officer at Microsoft. “Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices.”

    The following table reconciles our financial results reported in accordance with generally accepted accounting principles (“GAAP”) to non-GAAP financial results. Microsoft has provided this non-GAAP financial information to aid investors in better understanding the company’s performance. All growth comparisons relate to the corresponding period in the last fiscal year.

      Three Months Ended December 31,
     ($ in millions, except per share amounts) Revenue Operating Income Net Income Earnings per Share  
    2014 As Reported (GAAP) $26,470 $7,776 $5,863 $0.71  
      Net Impact from Revenue Deferrals (326) (326) (248) (0.03)  
      Integration and Restructuring Charges – 243 175 0.02  
    2014 As Adjusted (non-GAAP) $26,144 $7,693 $5,790 $0.70  
    2015 As Reported (GAAP) $23,796 $6,026 $4,998 $0.62  
      Net Impact from Revenue Deferrals 1,897 1,897 1,277 0.16  
    2015 As Adjusted (non-GAAP) $25,693 $7,923 $6,275 $0.78  
    Percentage Change Y/Y (GAAP) (10)% (23)% (15)% (13)%  
    Percentage Change Y/Y (non-GAAP) (2)% 3% 8% 11%  
    Percentage Change Y/Y (non-GAAP) Constant Currency 3% 13% 20% 23%  
               

    “We delivered double-digit operating income growth in non-GAAP constant currency while investing in key strategic areas that position Microsoft for continued long term growth,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

    Revenue in Productivity and Business Processes declined 2% (up 5% in constant currency) to $6.7 billion, with the following business highlights:

    • Office commercial products and cloud services revenue grew 5% in constant currency driven by Office 365 revenue growth of nearly 70% in constant currency
    • Office 365 consumer subscribers increased to 20.6 million
    • Dynamics revenue grew 11% in constant currency with Dynamics CRM Online seat adds more than doubling year-over-year for the fifth consecutive quarter

    Revenue in Intelligent Cloud grew 5% (up 11% in constant currency) to $6.3 billion, with the following business highlights:

    • Server products and cloud services revenue grew 10% in constant currency
    • Azure revenue grew 140% in constant currency with revenue from Azure premium services growing nearly 3x year-over-year
    • Over one third of the Fortune 500 have chosen our Enterprise Mobility solutions, up nearly 3x year-over-year

    Revenue in More Personal Computing declined 5% (down 2% in constant currency) to $12.7 billion, with the following business highlights:

    • Windows OEM revenue declined 5% in constant currency, outperforming the PC market, driven by higher consumer premium and mid-range device mix
    • Surface revenue increased 29% in constant currency driven by the launch of Surface Pro 4 and Surface Book
    • Phone revenue declined 49% in constant currency reflecting our strategy change announced in July 2015
    • Search advertising revenue excluding traffic acquisition costs grew 21% in constant currency with continued benefit from Windows 10 usage
    • Xbox Live monthly active users grew 30% year-over-year to a record 48 million

    “It was a strong holiday season for Microsoft highlighted by Surface and Xbox,” said Kevin Turner, chief operating officer at Microsoft. “Our commercial business executed well as our sales teams and partners helped customers realize the value of Microsoft’s cloud technologies across Azure, Office 365 and CRM Online.”

    Business Outlook

    Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

    Webcast Details

    Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, John Seethoff, deputy general counsel and corporate secretary, and Chris Suh, general manager of Investor Relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed athttp://www.microsoft.com/investor. The webcast will be available for replay through the close of business on January 28, 2017.

    Adjusted Financial Results and non-GAAP Measures

    During the second quarter of fiscal year 2016, GAAP revenue, operating income, net income, and earnings per share include the net impact from revenue deferrals. For the second quarter of fiscal year 2015, GAAP revenue, operating income, net income, and earnings per share include the recognition of previously deferred net revenue and charges related to integration and restructuring expenses. These items are defined below. In addition to these financial results reported in accordance with GAAP, Microsoft has provided certain non-GAAP financial information to aid investors in better understanding the company’s performance. Presenting these non-GAAP measures 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 Definitions

    Revenue Deferrals. Microsoft recorded a net $1.9 billion revenue deferral during the three months ended December 31, 2015, primarily related to Windows 10 and Halo 5.

    Microsoft recognized a net $326 million of previously deferred revenue during the three months ended December 31, 2014, primarily related to sales of bundled products and services.

    Integration and Restructuring Charges. Integration and restructuring expenses were $243 million during the three months ended December 31, 2014. Integration and restructuring expenses include employee severance expenses and costs associated with the consolidation of facilities and manufacturing operations related to restructuring activities, and systems consolidation and other business integration expenses associated with the acquisition of Nokia’s Devices and Services business.

    Constant Currency

    Microsoft presents constant currency information to provide a non-GAAP framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period non-GAAP results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods.  The non-GAAP financial measures presented below should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. All growth comparisons relate to the corresponding period in the last fiscal year.

    Financial Performance Constant Currency Reconciliation

      Three Months Ended December 31,
     ($ in millions, except per share amounts) Revenue Operating Income Net Income Earnings per Share  
    2014 As Reported (GAAP) $26,470 $7,776 $5,863 $0.71  
    2014 As Adjusted (non-GAAP) $26,144 $7,693 $5,790 $0.70  
    2015 As Reported (GAAP) $23,796 $6,026 $4,998 $0.62  
    2015 As Reported (non-GAAP) $25,693 $7,923 $6,275 $0.78  
    Percentage Change Y/Y (GAAP) (10)% (23)% (15)% (13)%  
    Percentage Change Y/Y (non-GAAP) (2)% 3% 8% 11%  
    Constant Currency Impact $(1,212) $(766) $(676) $(0.08)  
    Percentage Change Y/Y (non-GAAP) Constant Currency 3% 13% 20% 23%  

    Segment Revenue Constant Currency Reconciliation

      Three Months Ended December 31,
     ($ in millions) Productivity and Business Processes Intelligent Cloud More Personal Computing  
    2014 As Reported (GAAP) $6,822 $6,041 $13,282  
    2015 As Reported (GAAP) $6,690 $6,343 $12,660  
    Percentage Change Y/Y (GAAP) (2)% 5% (5)%  
    Constant Currency Impact $(439) $(369) $(404)  
    Percentage Change Y/Y (GAAP) Constant Currency 5% 11% (2)%  

     

    About Microsoft

    Microsoft (Nasdaq “MSFT” @microsoft) is the leading platform and productivity company for the mobile-first, cloud-first world and its mission is to empower every person and every organization on the planet to achieve more.

    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;
    • increasing focus on services presents execution and competitive risks;
    • significant investments in new products and services that may not be profitable;
    • acquisitions, joint ventures, and strategic alliances may have an adverse effect on our business;
    • impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
    • Microsoft’s continued ability to protect and earn revenues from 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 and services that could reduce revenue or lead to liability;
    • disclosure of personal data that could cause 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;
    • potential liability under trade protection and anti-corruption laws resulting from our international operations;
    • laws and regulations relating to the handling of personal data may impede the adoption of our services or result in increased costs, legal claims or fines against us;
    • Microsoft’s ability to attract and retain talented employees;
    • adverse results in legal disputes;
    • unanticipated tax liabilities;
    • Microsoft’s hardware and software products may experience quality or supply problems;
    • exposure to increased economic and operational uncertainties from operating a global business;
    • catastrophic events or geo-political conditions may disrupt our business; and
    • adverse economic or market conditions may harm our business.

    For more information about 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 athttp://www.microsoft.com/investor.

    All information in this release is as of January 28, 2016. 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.

    For more information, press only:

    Rapid Response Team, Waggener Edstrom Worldwide, (503) 443-7070,[email protected]

    For more information, financial analysts and investors only:

    Chris Suh, general manager, Investor Relations, (425) 706-4400

    Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news/. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available athttp://www.microsoft.com/investor.

    MICROSOFT CORPORATION
    INCOME STATEMENTS
    (In millions, except per share amounts)(Unaudited)
    Three Months Ended December 31, Six Months Ended December 31,
      2015   2014   2015   2014
    Revenue  $   23,796  $26,470  $    44,175  $49,671
    Cost of revenue 9,872 10,136 17,079 18,409
       Gross margin 13,924 16,334 27,096 31,262
    Research and development 2,900 2,903 5,862 5,968
    Sales and marketing 3,960 4,315 7,293 8,043
    General and administrative 1,038 1,097 2,122 2,248
    Impairment, integration, and
    restructuring    		 0 243 0 1,383
    Operating income 6,026 7,776 11,819 13,620
    Other income (expense), net (171) 74 (451) 126
    Income before income taxes 5,855 7,850 11,368 13,746
    Provision for income taxes 857 1,987 1,750 3,343
    Net income  $     4,998  $  5,863  $      9,618  $10,403
    Earnings per share:
       Basic  $      0.63  $    0.71  $        1.21  $    1.26
       Diluted  $      0.62  $    0.71  $        1.20  $    1.25
    Weighted average shares outstanding:
       Basic 7,964 8,228 7,980 8,238
       Diluted 8,028 8,297 8,047 8,321
    Cash dividends declared per
    common share    		  $      0.36    $    0.31    $        0.72    $    0.62

     

    MICROSOFT CORPORATION
    COMPREHENSIVE INCOME STATEMENTS
    (In millions)(Unaudited)
    Three Months Ended December 31, Six Months Ended December 31,
      2015   2014   2015   2014
    Net income  $     4,998  $  5,863  $      9,618  $10,403
    Other comprehensive income (loss):
       Net unrealized gains (losses) on
    derivatives (net of tax effects
    of $5, $6, $28, and $10)    		 (49) 247 8 566
       Net unrealized gains (losses) on
    investments (net of tax effects
    of $86, $(124), $(222), and
    $(226))    		 160 (231) (411) (420)
       Translation adjustments and
    other (net of tax effects of
    $(9), $(211), $(21), and $(258))    		 (76) (390) (346) (471)
          Other comprehensive income
    (loss)    		 35 (374) (749) (325)
    Comprehensive income  $     5,033  $  5,489  $      8,869  $10,078

     

    MICROSOFT CORPORATION
    BALANCE SHEETS
    (In millions)(Unaudited)
      December 31,
    2015    		   June 30, 2015
    Assets
    Current assets:
      Cash and cash equivalents  $           7,185  $      5,595
      Short-term investments (including securities
    loaned of $360 and $75)    		 95,455 90,931
        Total cash, cash equivalents, and short-term
    investments    		 102,640 96,526
      Accounts receivable, net of allowance for doubtful
    accounts of $384 and $335    		 14,507 17,908
      Inventories 2,702 2,902
      Deferred income taxes 1,618 1,915
      Other 6,345 5,461
        Total current assets 127,812 124,712
    Property and equipment, net of accumulated
    depreciation of $18,008 and $17,606    		 15,789 14,731
    Equity and other investments 11,514 12,053
    Goodwill 17,436 16,939
    Intangible assets, net 4,619 4,835
    Other long-term assets 2,928 2,953
               Total assets  $       180,098  $  176,223
    Liabilities and stockholders’ equity
    Current liabilities:
      Accounts payable  $           6,936  $      6,591
      Short-term debt 3,000 4,985
      Current portion of long-term debt 750 2,499
      Accrued compensation 3,649 5,096
      Income taxes 493 606
      Short-term unearned revenue 20,929 23,223
      Securities lending payable 439 92
      Other 6,447 6,766
        Total current liabilities 42,643 49,858
    Long-term debt 40,679 27,808
    Long-term unearned revenue 4,102 2,095
    Deferred income taxes 2,194 2,835
    Other long-term liabilities 13,700 13,544
        Total liabilities 103,318 96,140
    Commitments and contingencies
    Stockholders’ equity:
      Common stock and paid-in capital – shares
    authorized 24,000; outstanding 7,925 and 8,027    		 68,279 68,465
      Retained earnings 6,728 9,096
      Accumulated other comprehensive income 1,773 2,522
        Total stockholders’ equity 76,780 80,083
               Total liabilities and stockholders’ equity  $       180,098  $  176,223

     

    MICROSOFT CORPORATION
    CASH FLOWS STATEMENTS
    (In millions)(Unaudited)
    Three Months Ended December 31, Six Months Ended December 31,
      2015   2014   2015   2014
    Operations
    Net income  $     4,998  $  5,863  $      9,618  $10,403
    Adjustments to reconcile net
    income to net cash from
    operations:
       Depreciation, amortization, and
    other    		 1,544 1,521 3,005 2,949
       Stock-based compensation
    expense    		 658 633 1,332 1,279
       Net recognized losses (gains)
    on investments and derivatives    		 50 (179) 151 (124)
       Excess tax benefits from
    stock-based compensation    		 (20) (22) (302) (524)
       Deferred income taxes (247) 314 (174) 615
       Deferral of unearned revenue 12,570 10,200 22,993 18,222
       Recognition of unearned revenue (11,929) (11,495) (23,284) (22,138)
       Changes in operating assets
    and liabilities:
          Accounts receivable (3,118) (3,378) 3,258 3,249
          Inventories 1,104 1,070 167 587
          Other current assets (912) (159) (1,192) (439)
          Other long-term assets 56 170 51 449
          Accounts payable 369 137 234 (522)
          Other current liabilities 105 (986) (1,919) (2,152)
          Other long-term liabilities 370 651 254 840
             Net cash from operations 5,598 4,340 14,192 12,694
    Financing
    Proceeds from issuance
    (repayments) of short-term debt,
    maturities of 90 days or less, net    		 (7,031) 4,798 (2,141) 7,797
    Proceeds from issuance of debt 13,128 0 13,249 0
    Repayments of debt (121) 0 (1,871) (1,500)
    Common stock issued 117 121 336 337
    Common stock repurchased (3,678) (2,145) (8,435) (5,033)
    Common stock cash dividends paid (2,868) (2,547) (5,343) (4,854)
    Excess tax benefits from
    stock-based compensation    		 20 22 302 524
    Other (65) 285 (243) 285
             Net cash from (used in)
    financing    		 (498) 534 (4,146) (2,444)
    Investing
    Additions to property and
    equipment    		 (2,024) (1,490) (3,380) (2,772)
    Acquisition of companies, net of
    cash acquired, and purchases of
    intangible and other assets    		 (381) (2,794) (771) (2,935)
    Purchases of investments (34,750) (19,167) (72,320) (43,252)
    Maturities of investments 5,351 2,389 11,037 4,082
    Sales of investments 28,191 16,108 56,693 32,553
    Securities lending payable 285 238 347 (129)
             Net cash used in investing (3,328) (4,716) (8,394) (12,453)
    Effect of exchange rates on cash
    and cash equivalents    		 (18) (34) (62) (40)
    Net change in cash and cash
    equivalents    		 1,754 124 1,590 (2,243)
    Cash and cash equivalents,
    beginning of period    		 5,431 6,302 5,595 8,669
    Cash and cash equivalents, end of
    period    		  $     7,185  $  6,426  $      7,185  $  6,426

     

     

    MICROSOFT CORPORATION              
                   
    SEGMENT REVENUE AND OPERATING INCOME
    (In millions)(Unaudited)
                   
      Three Months Ended December 31,   Six Months Ended December 31,
       
      2015   2014   2015   2014
    Revenue              
    Productivity and Business Processes  $     6,690    $  6,822    $   12,990    $13,312
    Intelligent Cloud 6,343   6,041   12,232   11,516
    More Personal Computing 12,660   13,282   22,114   24,548
    Corporate and Other (1,897)   325   (3,161)   295
      Total revenue  $   23,796    $26,470    $   44,175    $49,671
                   
    Operating Income (Loss)              
    Productivity and Business Processes  $     3,305    $  3,587    $     6,460    $  6,988
    Intelligent Cloud 2,580   2,600   4,977   4,705
    More Personal Computing 2,038   1,506   3,542   3,014
    Corporate and Other (1,897)   83   (3,160)   (1,087)
      Total operating income  $     6,026    $  7,776    $   11,819    $13,620


     
    Image via Microsoft

  • Amazon Earnings Out, Sales up 22%

    Amazon Earnings Out, Sales up 22%

    Amazon just announced its earnings for Q4 with sales up 22% to $35.7 billion.

    Operating cash flow was up 74% to $11.9 billion over the year with free cash flow up to $7.3 billion.

    EPS was $1, which was significantly lower than Wall Street expectations.

    CEO Jeff Bezos said, “Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift. This year, we pass $100 billion in annual sales and serve 300 million customers. And still, measured by the dynamism we see everywhere in the marketplace and by the ever-expanding opportunities we see to invent on behalf of customers, it feels every bit like Day 1.”

    Here’s the release in its entirety:

    SEATTLE–(BUSINESS WIRE)–Jan. 28, 2016– Amazon.com, Inc. (NASDAQ: AMZN) today announced financial results for its fourth quarter ended December 31, 2015.

    Operating cash flow increased 74% to $11.9 billion for the trailing twelve months, compared with $6.8 billion for the trailing twelve months ended December 31, 2014. Free cash flow increased to $7.3 billion for the trailing twelve months, compared with $1.9 billion for the trailing twelve months ended December 31, 2014. Free cash flow less lease principal repayments increased to $4.7 billion for the trailing twelve months, compared with $529 million for the trailing twelve months ended December 31, 2014. Free cash flow less finance lease principal repayments and assets acquired under capital leases increased to $2.5 billion for the trailing twelve months, compared with an outflow of $2.2 billion for the trailing twelve months ended December 31, 2014.

    Common shares outstanding plus shares underlying stock-based awards totaled 490 million on December 31, 2015, compared with 483 million one year ago.

    Fourth Quarter 2015

    Net sales increased 22% to $35.7 billion in the fourth quarter, compared with $29.3 billion in fourth quarter 2014. Excluding the $1.2 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 26% compared with fourth quarter 2014.

    Operating income increased 88% to $1.1 billion in the fourth quarter, compared with operating income of $591 million in fourth quarter 2014.

    Net income was $482 million in the fourth quarter, or $1.00 per diluted share, compared with net income of $214 million, or$0.45 per diluted share, in fourth quarter 2014.

    Full Year 2015

    Net sales increased 20% to $107.0 billion, compared with $89.0 billion in 2014. Excluding the $5.2 billion unfavorable impact from year-over-year changes in foreign exchange rates throughout the year, net sales increased 26% compared with 2014.

    Operating income was $2.2 billion, compared with operating income of $178 million in 2014.

    Net income was $596 million, or $1.25 per diluted share, compared with net loss of $241 million, or $0.52 per diluted share, in 2014.

    “Twenty years ago, I was driving the packages to the post office myself and hoping we might one day afford a forklift. This year, we pass $100 billion in annual sales and serve 300 million customers,” said Jeff Bezos, founder and CEO of Amazon.com. “And still, measured by the dynamism we see everywhere in the marketplace and by the ever-expanding opportunities we see to invent on behalf of customers, it feels every bit like Day 1.”

    Highlights

    • Fire TV remains the #1 best-selling streaming media player in the U.S., having added over 1,000 new apps, channels, and games since September, including NBC, NBC Sports, Watch HGTV, Watch Food Network, and Watch Travel Channel.
    • The $50 Fire tablet has been the #1 best-selling, most gifted, and most wished-for product across all items available on Amazon.com since its introduction 19 weeks ago.
    • The Alexa Skills Kit and Alexa Voice Service continue to attract innovative companies, with Ford, Invoxia, Vivint,Alarm.com, and Ooma announcing plans to integrate their products and services with Alexa. In addition, Alexa continues to get smarter with new features, including local search from Yelp, news sources from CNN andBloomberg, enhanced IFTTT support, new alarm tones, and customized sports updates.
    • Last quarter, developers added over 100 new capabilities to Alexa-enabled devices. Amazon Echo and Fire TV customers can now play Jeopardy!, get stock quotes with Fidelity, hear headlines from The Huffington Post, exercise with a seven-minute workout, and test their Star Wars knowledge with a trivia quiz from Disney.
    • Amazon announced the first devices available with Amazon Dash Replenishment Service, including products from Brother, GE, and Gmate. Additionally, new brands and devices have joined the Dash Replenishment program, including Purell and Whirlpool.
    • In 2015, worldwide paid Prime memberships increased 51% — 47% in the U.S. and even faster outside the U.S.
    • Prime Video continues to grow internationally with nearly double the streaming customers compared with fourth quarter 2014.
    • The Prime-exclusive Original Series Mozart in the Jungle received two Golden Globes for Best Television Series – Musical or Comedy and Best Performance by an Actor in a Television Series – Musical or Comedy (Gael García Bernal).
    • Over the holidays Prime members made The Man in The High Castle the most watched series on Prime Video by 4.5x. The Amazon Original Series received outstanding critical acclaim, including USA Today calling it the “best new drama of the season.”
    • The second season of hit show Transparent was named as one of the top television series of 2015 by The New York Times, Variety, IndieWire, and The New Yorker.
    • Amazon Studios released its first Original Movie Chi-Raq, directed by Spike Lee, to rave reviews. The film has been included in 2015 “Best Films” lists from LA Weekly, The New Yorker, The Washington Post, Los Angeles Times, Slant, and Vulture.
    • Amazon launched the Streaming Partners Program, an over-the-top streaming subscription program that gives Prime members the option to add SHOWTIME, STARZ, and dozens more video subscriptions to their Prime membership.
    • In the fourth quarter, Prime Music streaming hours more than tripled in the U.S. compared with fourth quarter 2014.
    • Prime Music launched in Germany and Japan, offering Prime members more than one million songs and hundreds of playlists at no additional cost to their membership.
    • Since launching in December 2014 with one location, Prime Now has grown to more than 25 metropolitan areas across the U.S., U.K., Italy, and Japan.
    • Prime Same Day launched in the U.K. and Germany, offering Prime members unlimited free same-day delivery on a million items.
    • Amazon Pantry launched in the U.K., allowing Prime members to purchase daily essentials in everyday sizes and have items delivered for a low, flat-rate fee.
    • In 2015, Fulfillment by Amazon (FBA) shipped over one billion units on behalf of sellers. The number of active sellers using FBA grew more than 50%.
    • In the fourth quarter, FBA units represented nearly 50% of total third-party units.
    • Payment volume from Pay with Amazon grew more than 150% year-over-year in 2015, giving Amazon shoppers a secure way to pay on thousands of websites using information already stored in their Amazon accounts.
    • Amazon China launched the Amazon Global Store (AGS) 2.0 customer experience, which provides customers an easier and more convenient shopping experience through single login, unified shopping cart, and local payment. Additionally, AGS selection has grown to over nine million items.
    • Amazon.in was the top e-commerce site in India throughout the fourth quarter, including the busy Diwali shopping season, according to global analytics firm comScore.
    • Downloads of the Amazon.in mobile shopping app grew faster in the fourth quarter than any other e-commerce app in India, according to app analytics firm App Annie.
    • Sellers on Amazon.in sold more in the fourth quarter than in all four quarters combined in 2014.
    • Amazon Fashion, East Dane, and MyHabit return as the lead sponsor for the second season of New York Fashion Week: Men’s, hosted by The Council of Fashion Designers of America.
    • Amazon Launchpad, a program that helps startups launch, market, and distribute their products, has worked with leading venture capital firms, startup accelerators, and crowd-funding platforms to help more than 500 startups launch over 750 products in the U.S., U.K., and China.
    • Amazon entered into an agreement to support the construction and operation of Amazon Wind Farm U.S. Central, which is expected to generate approximately 320,000 megawatt hours (MWh) of wind energy on an annual basis. Amazon Wind Farm U.S. Central, combined with Amazon’s previously announced projects, Amazon Wind Farm Fowler Ridge, Amazon Solar Farm U.S. East in Virginia, and Amazon Wind Farm U.S. East in North Carolina, will be responsible for delivering more than 1.6 million MWh of additional renewable energy annually, roughly equivalent to the amount of energy required to power 150,000 U.S. homes for a year.
    • Only eight months after launch, Amazon Business, a marketplace with features and benefits tailored to businesses, serves more than 200,000 businesses ranging from small businesses to Fortune 500 companies.
    • Amazon Web Services (AWS) announced the launch of its Asia Pacific (Seoul) Region in Korea and its plans to open a new region in Canada. The AWS Cloud is now available from 32 Availability Zones across 12 geographic regions worldwide, with another five AWS Regions (and 11 Availability Zones) in Canada, China, India, Ohio, and the U.K. expected to be available in the coming year.
    • AWS announced the general availability of Amazon WorkMail, a secure, managed business email and calendaring service with support for existing desktop and mobile email clients.
    • AWS announced the general availability of AWS IoT, a managed cloud platform that lets billions of connected devices — such as mobile phones, cars, factory floors, aircraft engines, sensor grids, and more — easily and securely interact with cloud applications and other devices. AWS IoT can support trillions of messages, and can process, route, and keep track of those messages to AWS endpoints and other devices reliably and securely, even when the devices aren’t connected.
    • AWS announced AWS Certificate Manager (ACM), a new service that enables customers to easily provision, manage, and deploy Secure Sockets Layer/Transport Layer Security (SSL/TLS) certificates for use with AWS services. SSL/TLS certificates are used to secure network communications and establish the identity of websites over the Internet. Certificates, which typically cost between $45 and $499, are provided to AWS customers free of charge through ACM and are verified by Amazon’s certificate authority, Amazon Trust Services.
    • AWS launched EC2 Scheduled Reserved Instances, allowing customers to reserve capacity for their applications that run on a part-time, recurring basis with a daily, weekly, or monthly schedule over the course of a one-year term.
    • AWS announced 722 significant new services and features in 2015, a 40% increase over 2014.

    Financial Guidance

    The following forward-looking statements reflect Amazon.com’s expectations as of January 28, 2016, and are subject to substantial uncertainty. 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 customer spending, world events, the rate of growth of the Internet and online commerce, and the various factors detailed below.

    First Quarter 2016 Guidance

    • Net sales are expected to be between $26.5 billion and $29.0 billion, or to grow between 17% and 28% compared with first quarter 2015.
    • Operating income is expected to be between $100 million and $700 million, compared with $255 million in first quarter 2015.
    • This guidance includes approximately $600 million for stock-based compensation and other operating expense (income), net. It assumes, among other things, that no additional business acquisitions, investments, restructurings, 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 2:00 p.m. PT/5:00 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, sortation, delivery, 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, payments risks, 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, 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 theSEC, corporate governance information (including our Code of Business Conduct and Ethics), and select press releases and social media postings, which may contain material information about us, and you may subscribe to be notified of new information posted to this site.

    About Amazon

    Amazon.com opened on the World Wide Web in July 1995. The company is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Customer reviews, 1-Click shopping, personalized recommendations, Prime, Fulfillment by Amazon, AWS, Kindle Direct Publishing, Kindle, Fire tablets, Fire TV, Amazon Echo, and Alexa are some of the products and services pioneered byAmazon. For more information, visit www.amazon.com/about.

    AMAZON.COM, INC.
    Consolidated Statements of Cash Flows
    (in millions)
    Three Months Ended Twelve Months Ended
    December 31, December 31,
    2015 2014 2015

    2014
    (unaudited)
    CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 10,709 $ 5,258 $ 14,557 $ 8,658
    OPERATING ACTIVITIES:
    Net income (loss) 482 214 596 (241 )
    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, including capitalized content costs 1,752 1,379 6,281 4,746
    Stock-based compensation 606 408 2,119 1,497
    Other operating expense (income), net 35 36 155 129
    Losses (gains) on sales of marketable securities, net 1 — 5 (3 )
    Other expense (income), net 79 78 245 62
    Deferred income taxes 190 185 81 (316 )
    Excess tax benefits from stock-based compensation 93 115 (119 ) (6 )
    Changes in operating assets and liabilities:
    Inventories (1,343 ) (1,139 ) (2,187 ) (1,193 )
    Accounts receivable, net and other (1,178 ) (1,104 ) (1,755 ) (1,039 )
    Accounts payable 6,140 5,053 4,294 1,759
    Accrued expenses and other 1,836 1,451 913 706
    Additions to unearned revenue 2,422 1,378 7,401 4,433
    Amortization of previously unearned revenue (2,303 ) (1,339 ) (6,109 ) (3,692 )
    Net cash provided by (used in) operating activities 8,812 6,715 11,920 6,842
    INVESTING ACTIVITIES:
    Purchases of property and equipment, including internal-use software and website development, net (1,309 ) (1,144 ) (4,589 ) (4,893 )
    Acquisitions, net of cash acquired, and other (317 ) (53 ) (795 ) (979 )
    Sales and maturities of marketable securities 1,135 355 3,025 3,349
    Purchases of marketable securities (1,359 ) (1,623 ) (4,091 ) (2,542 )
    Net cash provided by (used in) investing activities (1,850 ) (2,465 ) (6,450 ) (5,065 )
    FINANCING ACTIVITIES:
    Excess tax benefits from stock-based compensation (93 ) (115 ) 119 6
    Proceeds from long-term debt and other 93 5,981 353 6,359
    Repayments of long-term debt and other (940 ) (183 ) (1,652 ) (513 )
    Principal repayments of capital lease obligations (724 ) (406 ) (2,462 ) (1,285 )
    Principal repayments of finance lease obligations (26 ) (68 ) (121 ) (135 )
    Net cash provided by (used in) financing activities (1,690 ) 5,209 (3,763 ) 4,432
    Foreign-currency effect on cash and cash equivalents (91 ) (160 ) (374 ) (310 )
    Net increase (decrease) in cash and cash equivalents 5,181 9,299 1,333 5,899
    CASH AND CASH EQUIVALENTS, END OF PERIOD $ 15,890 $ 14,557 $ 15,890 $ 14,557
    SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for interest on long-term debt $ 148 $ 36 $ 325 $ 91
    Cash paid for interest on capital and finance lease obligations 44 29 153 86
    Cash paid for income taxes (net of refunds) 73 30 273 177
    Property and equipment acquired under capital leases 1,332 1,214 4,717 4,008
    Property and equipment acquired under build-to-suit leases 163 214 544 920
    AMAZON.COM, INC.
    Consolidated Statements of Operations
    (in millions, except per share data)
    Three Months Ended Twelve Months Ended
    December 31, December 31,
    2015 2014 2015 2014
    (unaudited)
    Net product sales $ 26,618 $ 23,102 $ 79,268 $ 70,080
    Net service sales 9,129 6,226 27,738 18,908
    Total net sales 35,747 29,328 107,006 88,988
    Operating expenses (1):
    Cost of sales 24,341 20,671 71,651 62,752
    Fulfillment 4,546 3,424 13,410 10,766
    Marketing 1,755 1,526 5,254 4,332
    Technology and content 3,571 2,635 12,540 9,275
    General and administrative 390 442 1,747 1,552
    Other operating expense (income), net 36 39 171 133
    Total operating expenses 34,639 28,737 104,773 88,810
    Income from operations 1,108 591 2,233 178
    Interest income 13 8 50 39
    Interest expense (115 ) (74 ) (459 ) (210 )
    Other income (expense), net (68 ) (96 ) (256 ) (118 )
    Total non-operating income (expense) (170 ) (162 ) (665 ) (289 )
    Income (loss) before income taxes 938 429 1,568 (111 )
    Provision for income taxes (453 ) (205 ) (950 ) (167 )
    Equity-method investment activity, net of tax (3 ) (10 ) (22 ) 37
    Net income (loss) $ 482 $ 214 $ 596 $ (241 )
    Basic earnings per share $ 1.03 $ 0.46 $ 1.28 $ (0.52 )
    Diluted earnings per share $ 1.00 $ 0.45 $ 1.25 $ (0.52 )
    Weighted-average shares used in computation of earnings per share:
    Basic 470 464 467 462

    Diluted

    		 481 472 477 462

    ______________________________
    (1) Includes stock-based compensation as follows:
    Fulfillment $ 137 $ 97 $ 482 $ 375
    Marketing 57 34 190 125
    Technology and content 364 226 1,224 804
    General and administrative 48 51 223 193
    AMAZON.COM, INC.
    Consolidated Statements of Comprehensive Income (Loss)
    (in millions)

    Three Months Ended

    		 Twelve Months Ended
    December 31, December 31,
    2015 2014 2015 2014
    (unaudited)
    Net income (loss) $ 482 $ 214 $ 596 $ (241 )
    Other comprehensive income (loss):
    Foreign currency translation adjustments, net of tax of $7, $(3), $10, and $(3) (40 ) (116 ) (210 ) (325 )
    Net change in unrealized gains (losses) on available-for-sale securities:
    Unrealized gains (losses), net of tax of $1, $1, $(5), and $1 (9 ) 2 (7 ) 2
    Reclassification adjustment for losses (gains) included in “Other income (expense), net,” net of tax of $0, $(1), $0, and $(1) 1 (2 ) 5 (3 )
    Net unrealized gains (losses) on available-for-sale securities (8 ) — (2 ) (1 )
    Total other comprehensive income (loss) (48 ) (116 ) (212 ) (326 )
    Comprehensive income (loss) $ 434 $ 98 $ 384 $ (567 )
    AMAZON.COM, INC.
    Segment Information
    (in millions)
    Three Months Ended Twelve Months Ended
    December 31, December 31,
    2015 2014 2015 2014
    (unaudited)
    North America
    Net sales $ 21,501 $ 17,333 $ 63,708 $ 50,834
    Segment operating expenses (1) 20,498 16,600 60,957 49,542
    Segment operating income (loss) $ 1,003 $ 733 $ 2,751 $ 1,292
    International
    Net sales $ 11,841 $ 10,575 $ 35,418 $ 33,510
    Segment operating expenses (1) 11,781 10,510 35,509 33,654
    Segment operating income (loss) $ 60 $ 65 $ (91 ) $ (144 )
    AWS
    Net sales $ 2,405 $ 1,420 $ 7,880 $ 4,644
    Segment operating expenses (1) 1,718 1,180 6,017 3,984
    Segment operating income (loss) $ 687 $ 240 $ 1,863 $ 660
    Consolidated
    Net sales $ 35,747 $ 29,328 $ 107,006 $ 88,988
    Segment operating expenses (1) 33,997 28,290 102,483 87,180
    Segment operating income (loss) 1,750 1,038 4,523 1,808
    Stock-based compensation (606 ) (408 ) (2,119 ) (1,497 )
    Other operating income (expense), net (36 ) (39 ) (171 ) (133 )
    Income from operations 1,108 591 2,233 178
    Total non-operating income (expense) (170 ) (162 ) (665 ) (289 )
    Provision for income taxes (453 ) (205 ) (950 ) (167 )
    Equity-method investment activity, net of tax (3 ) (10 ) (22 ) 37
    Net income (loss) $ 482 $ 214 $ 596 $ (241 )
    Segment Highlights:
    Y/Y net sales growth:
    North America 24 % 21 % 25 % 23 %
    International 12 3 6 12
    AWS 69 47 70 49
    Consolidated 22 15 20 20
    Net sales mix:
    North America 60 % 59 % 60 % 57 %
    International 33 36 33 38
    AWS 7 5 7 5
    Consolidated 100 % 100 % 100 % 100 %

    ______________________________

    (1) Excludes stock-based compensation and “Other operating expense (income), net,” which are not allocated to segments.
    AMAZON.COM, INC.
    Supplemental Net Sales Information
    (in millions)
    Three Months Ended Twelve Months Ended
    December 31, December 31,
    2015 2014 2015 2014
    (unaudited)
    Net Sales:
    North America
    Media $ 3,931 $ 3,544 $ 12,483 $ 11,567
    Electronics and other general merchandise 17,325 13,529 50,401 38,517
    Other (1) 245 260 824 750
    Total North America $ 21,501 $ 17,333 $ 63,708 $ 50,834
    International
    Media $ 3,292 $ 3,406 $ 10,026 $ 10,938
    Electronics and other general merchandise 8,491 7,109 25,196 22,369
    Other (1) 58 60 196 203
    Total International $ 11,841 $ 10,575 $ 35,418 $ 33,510
    Year-over-year Percentage Growth:
    North America
    Media 11 % 1 % 8 % 7 %
    Electronics and other general merchandise 28 27 31 28
    Other (6 ) 28 10 22
    Total North America 24 21 25 23
    International
    Media (3 )% (8 )% (8 )% — %
    Electronics and other general merchandise 19 10 13 19
    Other (3 ) (6 ) (3 ) (3 )
    Total International 12 3 6 12
    Year-over-year Percentage Growth, excluding the effect of foreign exchange rates:
    North America
    Media 12 % 1 % 8 % 7 %
    Electronics and other general merchandise 28 27 31 29
    Other (6 ) 28 10 22
    Total North America 24 21 26 23
    International
    Media 5 % (1 )% 4 % 2 %
    Electronics and other general merchandise 31 19 29 21
    Other 5 1 10 (3 )
    Total International 22 12 21 14

    ______________________________

    (1) Includes sales from non-retail activities, such as certain advertising services and our co-branded credit card agreements.
    AMAZON.COM, INC.
    Consolidated Balance Sheets
    (in millions, except per share data)
    December 31, 2015 December 31, 2014
    ASSETS
    Current assets:
    Cash and cash equivalents $ 15,890 $ 14,557
    Marketable securities 3,918 2,859
    Inventories 10,243 8,299
    Accounts receivable, net and other 6,423 5,612
    Total current assets 36,474 31,327
    Property and equipment, net 21,838 16,967
    Goodwill 3,759 3,319
    Other assets 3,373 2,892
    Total assets $ 65,444 $ 54,505
    LIABILITIES AND STOCKHOLDERS’ EQUITY
    Current liabilities:
    Accounts payable $ 20,397 $ 16,459
    Accrued expenses and other 10,384 9,807
    Unearned revenue 3,118 1,823
    Total current liabilities 33,899 28,089
    Long-term debt 8,235 8,265
    Other long-term liabilities 9,926 7,410
    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 — 494 and 488
    Outstanding shares — 471 and 465 5 5
    Treasury stock, at cost (1,837 ) (1,837 )
    Additional paid-in capital 13,394 11,135
    Accumulated other comprehensive loss (723 ) (511 )
    Retained earnings 2,545 1,949
    Total stockholders’ equity 13,384 10,741
    Total liabilities and stockholders’ equity $ 65,444 $ 54,505
    AMAZON.COM, INC.
    Supplemental Financial Information and Business Metrics
    (in millions, except per share data)
    (unaudited)

    		Y/Y %
    Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Change
    Cash Flows and Shares
    Operating cash flow — trailing twelve months (TTM) $ 6,842 $ 7,845 $ 8,980 $ 9,823 $ 11,920 74 %
    Operating cash flow — TTM Y/Y growth (decline) 25 % 47 % 69 % 72 % 74 % N/A
    Purchases of property and equipment, including internal-use software and website development, net — TTM $ 4,893 $ 4,684 $ 4,607 $ 4,424 $ 4,589

    (6

    )%
    Principal repayments of capital lease obligations — TTM $ 1,285 $ 1,537 $ 1,832 $ 2,144 $ 2,462 92 %
    Principal repayments of finance lease obligations — TTM $ 135 $ 132 $ 155 $ 163 $ 121 (11 )%
    Property and equipment acquired under capital leases — TTM $ 4,008 $ 4,246 $ 4,710 $ 4,599 $ 4,717 18 %
    Free cash flow — TTM (1) $ 1,949 $ 3,161 $ 4,373 $ 5,399 $ 7,331 276 %
    Invested capital (2) $ 21,021 $ 23,090 $ 25,289 $ 27,425 $ 29,694 41 %
    Free cash flow less lease principal repayments — TTM (3) $ 529 $ 1,492 $ 2,386 $ 3,092 $ 4,748 797 %
    Free cash flow less finance lease principal repayments and assets acquired under capital leases — TTM (4) $ (2,194 ) $ (1,217 ) $ (492 ) $ 637 $ 2,493 N/A
    Common shares and stock-based awards outstanding 483 483 488 489 490 1 %
    Common shares outstanding 465 466 468 469 471 1 %
    Stock-based awards outstanding 18 17 20 20 19 7 %
    Stock-based awards outstanding — % of common shares outstanding 3.8 % 3.8 % 4.4 % 4.3 % 4.1 % N/A
    Results of Operations
    Worldwide (WW) net sales $ 29,328 $ 22,717 $ 23,185 $ 25,358 $ 35,747 22 %
    WW net sales — Y/Y growth, excluding F/X 18 % 22 % 27 % 30 % 26 % N/A
    WW net sales — TTM $ 88,988 $ 91,963 $ 95,808 $ 100,588 $ 107,006 20 %
    WW net sales — TTM Y/Y growth, excluding F/X 20 % 20 % 22 % 24 % 26 % N/A
    Operating income (loss) $ 591 $ 255 $ 464 $ 406 $ 1,108 88 %
    Operating income/loss — Y/Y growth (decline), excluding F/X 22 % 90 % N/A N/A 84 % N/A
    Operating margin — % of WW net sales 2.0 % 1.1 % 2.0 % 1.6 % 3.1 % N/A
    Operating income (loss) — TTM $ 178 $ 287 $ 765 $ 1,715 $ 2,233 N/A
    Operating income/loss — TTM Y/Y growth (decline), excluding F/X (79 )% (56 )% 35 % N/A N/A N/A
    Operating margin — TTM % of WW net sales 0.2 % 0.3 % 0.8 % 1.7 % 2.1 % N/A
    Net income (loss) $ 214 $ (57 ) $ 92 $ 79 $ 482 125 %
    Net income (loss) per diluted share $ 0.45 $ (0.12 ) $ 0.19 $ 0.17 $ 1.00 121 %
    Net income (loss) — TTM $ (241 ) $ (405 ) $ (188 ) $ 328 $ 596 N/A
    Net income (loss) per diluted share — TTM $ (0.52 ) $ (0.88 ) $ (0.41 ) $ 0.69 $ 1.25 N/A

    ______________________________

    (1) Free cash flow is cash flow from operations reduced by “Purchases of property and equipment, including internal-use software and website development, net” which is included in cash flow from investing activities.

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

    (3) Free cash flow less lease principal repayments is free cash flow reduced by “Principal repayments of capital lease obligations,” and “Principal repayments of finance lease obligations,” which are included in cash flow from financing activities.

    (4) Free cash flow less finance lease principal repayments and assets acquired under capital leases is free cash flow reduced by “Principal repayments of finance lease obligations,” which are included in cash flow from financing activities, and property and equipment acquired under capital leases. In this measure, property and equipment acquired under capital leases is reflected as if these assets had been purchased with cash, which is not the case as these assets have been leased.
    AMAZON.COM, INC.
    Supplemental Financial Information and Business Metrics
    (in millions)
    (unaudited)
    Y/Y %
    Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Change
    Segments
    North America Segment:
    Net sales $ 17,333 $ 13,406 $ 13,796 $ 15,006 $ 21,501 24 %
    Net sales — Y/Y growth, excluding F/X 21 % 24 % 26 % 29 % 24 % N/A
    Net sales — TTM $ 50,834 $ 53,432 $ 56,233 $ 59,540 $ 63,708 25 %
    Operating income (loss) $ 733 $ 517 $ 703 $ 528 $ 1,003 37 %
    Operating income/loss — Y/Y growth (decline), excluding F/X 77 % 111 % N/A 36 % N/A
    Operating margin — % of North America net sales 4.2 % 3.9 % 5.1 % 3.5 % 4.7 % N/A
    Operating income (loss) — TTM $ 1,292 $ 1,520 $ 1,893 $ 2,480 $ 2,751 113 %
    Operating margin — TTM % of North America net sales 2.5 % 2.8 % 3.4 % 4.2 % 4.3 % N/A
    International Segment:
    Net sales $ 10,575 $ 7,745 $ 7,565 $ 8,267 $ 11,841 12 %
    Net sales — Y/Y growth, excluding F/X 12 % 14 % 22 % 24 % 22 % N/A
    Net sales — TTM $ 33,510 $ 33,371 $ 33,598 $ 34,154 $ 35,418 6 %
    Net sales — TTM % of WW net sales 38 % 36 % 35 % 34 % 33 % N/A
    Operating income (loss) $ 65 $ (76 ) $ (19 ) $ (56 ) $ 60 (7 )%
    Operating income/loss — Y/Y growth (decline), excluding F/X N/A N/A N/A 65 % N/A
    Operating margin — % of International net sales 0.6 % (1.0 )% (0.2 )% (0.7 )% 0.5 % N/A
    Operating income (loss) — TTM $ (144 ) $ (188 ) $ (205 ) $ (86 ) $ (91 ) (36 )%
    Operating margin — TTM % of International net sales (0.4 )% (0.6 )% (0.6 )% (0.3 )% (0.3 )% N/A
    AWS Segment:
    Net sales $ 1,420 $ 1,566 $ 1,824 $ 2,085 $ 2,405 69 %
    Net sales — Y/Y growth, excluding F/X 47 % 49 % 81 % 78 % 69 % N/A
    Net sales — TTM $ 4,644 $ 5,160 $ 5,977 $ 6,894 $ 7,880 70 %
    Net sales — TTM % of WW net sales 5 % 6 % 6 % 7 % 7 % N/A
    Operating income (loss) $ 240 $ 265 $ 391 $ 521 $ 687 186 %
    Operating income/loss — Y/Y growth (decline), excluding F/X (13 )% 314 % 353 % 161 % N/A
    Operating margin — % of AWS net sales 16.9 % 16.9 % 21.4 % 25.0 % 28.5 % N/A
    Operating income (loss) — TTM $ 660 $ 680 $ 993 $ 1,417 $ 1,863 182 %
    Operating margin — TTM % of AWS net sales 14.2 % 13.2 % 16.6 % 20.6 % 23.6 % N/A
    Consolidated Segments:
    Operating expenses (5) $ 28,290 $ 22,011 $ 22,110 $ 24,365 $ 33,997 20 %
    Operating expenses — TTM (5) $ 87,180 $ 89,951 $ 93,126 $ 96,777 $ 102,483 18 %
    Operating income (loss) $ 1,038 $ 706 $ 1,075 $ 993 $ 1,750 69 %
    Operating income/loss — Y/Y growth (decline), excluding F/X 22 % 45 % 168 % N/A 67 % N/A
    Operating margin — % of Consolidated sales 3.5 % 3.1 % 4.6 % 3.9 % 4.9 % N/A
    Operating income (loss) — TTM $ 1,808 $ 2,012 $ 2,682 $ 3,811 $ 4,523 150 %
    Operating income/loss — TTM Y/Y growth (decline), excluding F/X (10 )% (1 )% 34 % 134 % 149 % N/A
    Operating margin — TTM % of Consolidated net sales 2.0 % 2.2 % 2.8 % 3.8 % 4.2 % N/A

    ______________________________

    (5) Represents cost of sales, fulfillment, marketing, technology and content, and general and administrative operating expenses, excluding stock-based compensation.
    AMAZON.COM, INC.
    Supplemental Financial Information and Business Metrics
    (in millions, except inventory turnover, accounts payable days and employee data)
    (unaudited)
    Y/Y %
    Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Change
    Supplemental
    Supplemental North America Segment Net Sales:
    Media $ 3,544 $ 2,969 $ 2,620 $ 2,963 $ 3,931 11 %
    Media — Y/Y growth, excluding F/X 1 % 5 % 7 % 9 % 12 % N/A
    Media — TTM $ 11,567 $ 11,711 $ 11,867 $ 12,096 $ 12,483 8 %
    Electronics and other general merchandise $ 13,529 $ 10,250 $ 10,987 $ 11,840 $ 17,325 28 %
    Electronics and other general merchandise — Y/Y growth, excluding F/X 27 % 31 % 32 % 35 % 28 % N/A
    Electronics and other general merchandise — TTM $ 38,517 $ 40,938 $ 43,559 $ 46,606 $ 50,401 31 %
    Electronics and other general merchandise — TTM % of North America net sales 76 % 77 % 77 % 78 % 79 % N/A
    Other $ 260 $ 187 $ 189 $ 203 $ 245 (6 )%
    Supplemental International Segment Net Sales:
    Media $ 3,406 $ 2,320 $ 2,094 $ 2,320 $ 3,292 (3 )%
    Media — Y/Y growth, excluding F/X (1 )% 2 % 3 % 6 % 5 % N/A
    Media — TTM $ 10,938 $ 10,615 $ 10,329 $ 10,140 $ 10,026 (8 )%
    Electronics and other general merchandise $ 7,109 $ 5,378 $ 5,425 $ 5,901 $ 8,491 19 %
    Electronics and other general merchandise — Y/Y growth, excluding F/X 19 % 21 % 31 % 32 % 31 % N/A
    Electronics and other general merchandise — TTM $ 22,369 $ 22,559 $ 23,072 $ 23,814 $ 25,196 13 %
    Electronics and other general merchandise — TTM % of International net sales 67 % 68 % 69 % 70 % 71 % N/A
    Other $ 60 $ 47 $ 46 $ 46 $ 58 (3 )%
    Balance Sheet
    Cash and marketable securities — ending $ 17,416 $ 13,781 $ 14,001 $ 14,428 $ 19,808 14 %
    Inventory, net — ending $ 8,299 $ 7,369 $ 7,470 $ 8,981 $ 10,243 23 %
    Inventory turnover, average — TTM 8.6 8.8 8.9 8.6 8.5 (2 )%
    Property and equipment, net — ending $ 16,967 $ 17,736 $ 19,479 $ 20,636 $ 21,838 29 %
    Accounts payable — ending $ 16,459 $ 11,917 $ 12,391 $ 14,437 $ 20,397 24 %
    Accounts payable days — ending 73 70 74 79 77 5 %
    Other
    WW shipping revenue $ 1,701 $ 1,299 $ 1,399 $ 1,494 $ 2,328 37 %
    WW shipping revenue – % of net sales (6) 6.1 % 6.1 % 6.6 % 6.4 % 7.0 % N/A
    WW shipping costs $ 3,049 $ 2,309 $ 2,340 $ 2,720 $ 4,170 37 %
    WW shipping costs – % of net sales (6) 10.9 % 10.9 % 11.0 % 11.7 % 12.5 % N/A
    WW net shipping costs $ 1,348 $ 1,010 $ 941 $ 1,226 $ 1,842 37 %
    WW net shipping costs — % of WW net sales (6) 4.8 % 4.8 % 4.4 % 5.3 % 5.5 % N/A
    WW paid units — Y/Y growth 20 % 20 % 22 % 26 % 26 % N/A
    WW seller unit mix — % of WW paid units 43 % 44 % 45 % 46 % 47 % N/A
    Employees (full-time and part-time; excludes contractors & temporary personnel) 154,100 165,000 183,100 222,400 230,800 50 %

    ______________________________

    (6) Includes North America and International segment net sales.

    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, AWS 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.

    AWS Customers

    • References to AWS customers mean unique AWS customer accounts, which are unique e-mail addresses that are eligible to use AWS services. This includes AWS accounts in the AWS free tier. Multiple users accessing AWS services via one account are counted as a single account. Customers are considered active when they have had AWS usage activity during the preceding one-month period.

    Units

    Source: Amazon.com, Inc.

    Image via Amazon

  • Facebook Earnings Out, Mobile Ad Revenue 80% Of All Ad Revenue

    Facebook Earnings Out, Mobile Ad Revenue 80% Of All Ad Revenue

    Facebook just released its earnings report for the fourth quarter and full-year 2015. Full-year revenue was $17.93 billion, up 44% year-over-year. Net income was $3.69 billion.

    Mobile ad revenue represented 80% of all ad revenue in the fourth quarter. That’s up 69% from the fourth quarter in 2014.

    The company announced that it hit 1.04 billion daily active users (on average) in December, which is up 17% from the year prior. Mobile daily active users were 934 million in December (up 25% year-over-year).

    Monthly active users were 1.59 billion at the end of the year, up 14% year-over-year. Mobile MAUs were 1.44 billion (up 21% year-over-year).

    Here’s the release in its entirety:

    MENLO PARK, Calif., Jan. 27, 2016 /PRNewswire/ — Facebook, Inc. (NASDAQ: FB) today reported financial results for the fourth quarter and full year ended December 31, 2015.

    “2015 was a great year for Facebook. Our community continued to grow and our business is thriving,” said Mark Zuckerberg, Facebookfounder and CEO. “We continue to invest in better serving our community, building our business, and connecting the world.”

    Fourth Quarter and Full Year 2015 Financial Summary  

    Three Months Ended December 31,

    Year Ended December 31,

    In millions, except percentages and per share amounts

    2015

    2014

    2015

    2014

    Revenue

    $ 5,841

    $ 3,851

    $ 17,928

    $ 12,466

    Income from Operations

       GAAP

    $ 2,560

    $ 1,133

    $   6,225

    $   4,994

       Non-GAAP*

    $ 3,523

    $ 2,219

    $ 10,001

    $   7,207

    Operating Margin

       GAAP

    44%

    29%

    35%

    40%

       Non-GAAP*

    60%

    58%

    56%

    58%

    Net Income

       GAAP

    $ 1,562

    $    701

    $   3,688

    $   2,940

       Non-GAAP*

    $ 2,265

    $ 1,518

    $   6,518

    $   4,713

    Diluted Earnings per Share (EPS)

       GAAP

    $   0.54

    $   0.25

    $     1.29

    $     1.10

       Non-GAAP*

    $   0.79

    $   0.54

    $     2.28

    $     1.77

    *

    Non-GAAP financial measures exclude amortization of intangible assets, share-based compensation and related payroll tax expenses. Non-GAAP net income and EPS also exclude the income tax effects of these non-GAAP adjustments. See the table below titled “Reconciliation of Non-GAAP Results to Nearest GAAP Measures.”

    Full Year 2015 Business Highlights

    • Revenue – Revenue for the full year 2015 was $17.93 billion, an increase of 44% year-over-year.
    • Income from operations – Income from operations for the full year 2015 was $6.23 billion.
    • Net income – Net income for the full year 2015 was $3.69 billion.
    • Free cash flow – Free cash flow for the full year 2015 was $6.08 billion.
    • Daily active users (DAUs) – DAUs were 1.04 billion on average for December 2015, an increase of 17% year-over-year.
    • Mobile DAUs – Mobile DAUs were 934 million on average for December 2015, an increase of 25% year-over-year.
    • Monthly active users (MAUs) – MAUs were 1.59 billion as of December 31, 2015, an increase of 14% year-over-year.
    • Mobile MAUs – Mobile MAUs were 1.44 billion as of December 31, 2015, an increase of 21% year-over-year.

    Fourth Quarter 2015 Financial Highlights

    GAAP

    Year-over-
    Year %
    Change

    Three Months Ended December 31,

    In millions, except percentages and per share amounts

    2015

    2014

    Revenue:

       Advertising(1)

    $ 5,637

    $ 3,594

    57%

       Payments and other fees

    204

    257

    (21)%

    Total revenue(2)

    5,841

    3,851

    52%

    Total costs and expenses

    3,281

    2,718

    21%

    Income from operations

    $ 2,560

    $ 1,133

    126%

    Operating margin

    44%

    29%

    Provision for income taxes

    995

    Effective tax rate

    39%

    Net income

    $ 1,562

    $    701

    123%

    Diluted EPS

    $   0.54

    $   0.25

    116%

    (1) Excluding the impact of year-over-year changes in foreign exchange rates, advertising revenue would have increased by 66%.

    (2) Excluding the impact of year-over-year changes in foreign exchange rates, total revenue would have increased by 60%.

    Non-GAAP

    Year-over-
    Year %
    Change

    Three Months Ended December 31,

    In millions, except percentages and per share amounts

    2015

    2014

    GAAP revenue

    $ 5,841

    $ 3,851

    52%

    Total costs and expenses

    2,318

    1,632

    42%

    Income from operations

    $ 3,523

    $ 2,219

    59%

    Operating margin

    60%

    58%

    Effective tax rate

    36%

    Net income

    $ 2,265

    $ 1,518

    49%

    Diluted EPS

    $   0.79

    $   0.54

    46%

    Fourth Quarter 2015 Other Financial Highlights

    • Mobile advertising revenue – Mobile advertising revenue represented approximately 80% of advertising revenue for the fourth quarter of 2015, up from 69% of advertising revenue in the fourth quarter of 2014.
    • Capital expenditures – Capital expenditures for the fourth quarter of 2015 were $692 million.
    • Cash and cash equivalents and marketable securities – Cash and cash equivalents and marketable securities were $18.43 billionat the end of the fourth quarter of 2015.
    • Free cash flow – Free cash flow for the fourth quarter of 2015 was $2.14 billion.

    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 of Facebook’s earnings release call can be accessed at investor.fb.com, along with the earnings press release, financial tables and slide presentation. Facebookuses the investor.fb.com website and Mark Zuckerberg’s Facebook Page (https://www.facebook.com/zuck) as means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

    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 16251646.

    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
    [email protected] / investor.fb.com

    Press:
    Vanessa Chan
    [email protected] / newsroom.fb.com

    Forward Looking Statements

    This press release contains forward-looking statements regarding our future business expectations, 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; our reliance on advertising revenue; our dependency on mobile operating systems, networks, and standards that we do not control; risks associated with new product development and their introduction as well as other new business initiatives; our emphasis on user growth and engagement and the user experience over short-term financial results; competition; litigation; privacy and regulatory concerns; risks associated with acquisitions; 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 Quarterly Report on Form 10-Q filed with the SEC on November 5, 2015, which is available on our Investor Relations website at investor.fb.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Annual Report on Form 10-K for the year ended December 31, 2015. In addition, please note that the date of this press release is January 27, 2016, 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: revenue excluding foreign exchange effect 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; non-GAAP effective tax rate; and free cash flow. 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 amortization of intangible assets, share-based compensation expense, and payroll tax related to share-based compensation expense, and the related income tax effects of the aforementioned exclusions, 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:

    Amortization of intangible assets. We amortize intangible assets acquired in connection with acquisitions. We exclude these amortization expenses because we do not believe these expenses are reflective of ongoing operating results in the period. These amounts arise from our prior acquisitions and have no direct correlation to the operation of our business.

    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 718, we believe that providing non-GAAP financial measures that exclude this expense allows investors 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 amortization of intangible assets, 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.

    Foreign exchange effect on revenue. We translated revenue for the three months and year ended December 31, 2015 using the prior year’s monthly exchange rates for our settlement currencies other than the U.S. dollar, which we believe is a useful metric that facilitates comparison to our historical performance.

    Purchases of property and equipment. We subtract purchases of property and equipment in our calculation of free cash flow because we believe that this methodology can provide useful supplemental information to help investors better understand underlying trends in our business.

    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 EndedDecember 31,

    Year EndedDecember 31,

    2015

    2014

    2015

    2014

    Revenue

    $ 5,841

    $ 3,851

    $ 17,928

    $ 12,466

    Costs and expenses:

       Cost of revenue

    824

    653

    2,867

    2,153

       Research and development

    1,314

    1,111

    4,816

    2,666

       Marketing and sales

    772

    624

    2,725

    1,680

       General and administrative

    371

    330

    1,295

    973

          Total costs and expenses

    3,281

    2,718

    11,703

    7,472

    Income from operations

    2,560

    1,133

    6,225

    4,994

    Interest and other income/(expense), net

    (3)

    (19)

    (31)

    (84)

    Income before provision for income taxes

    2,557

    1,114

    6,194

    4,910

    Provision for income taxes

    995

    413

    2,506

    1,970

    Net income

    $ 1,562

    $    701

    $   3,688

    $   2,940

    Less: Net income attributable to participating securities

    7

    5

    19

    15

    Net income attributable to Class A and Class B common stockholders

    $ 1,555

    $    696

    $   3,669

    $   2,925

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

       Basic

    $   0.55

    $   0.25

    $     1.31

    $     1.12

       Diluted

    $   0.54

    $   0.25

    $     1.29

    $     1.10

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

       Basic

    2,825

    2,761

    2,803

    2,614

       Diluted

    2,878

    2,816

    2,853

    2,664

    Share-based compensation expense included in costs and expenses:

       Cost of revenue

    $      22

    $      18

    $        81

    $        62

       Research and development

    583

    685

    2,350

    1,328

       Marketing and sales

    84

    103

    320

    249

       General and administrative

    57

    90

    218

    198

          Total share-based compensation expense

    $    746

    $    896

    $   2,969

    $   1,837

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

       Cost of revenue

    $         –

    $         –

    $          2

    $          3

       Research and development

    22

    6

    56

    33

       Marketing and sales

    2

    2

    10

    9

       General and administrative

    2

    5

    9

    12

          Total payroll tax expenses related to share-based compensation

    $      26

    $      13

    $        77

    $        57

    Amortization of intangible assets included in costs and expenses:

       Cost of revenue

    $      55

    $      42

    $      187

    $        87

       Research and development

    9

    10

    39

    33

       Marketing and sales

    103

    102

    410

    105

       General and administrative

    24

    23

    94

    94

          Total amortization of intangible assets

    $    191

    $    177

    $      730

    $      319

    FACEBOOK, INC.

    CONDENSED CONSOLIDATED BALANCE SHEETS

    (In millions)

    (Unaudited)

    December 31, 2015

    December 31, 2014

    Assets

    Current assets:

    Cash and cash equivalents

    $                       4,907

    $                       4,315

    Marketable securities

    13,527

    6,884

    Accounts receivable, net of allowances for doubtful accounts of $68 and $39 as of December 31, 2015 and December 31, 2014, respectively

    2,559

    1,678

    Prepaid expenses and other current assets(1)

    659

    513

       Total current assets

    21,652

    13,390

    Property and equipment, net

    5,687

    3,967

    Intangible assets, net

    3,246

    3,929

    Goodwill

    18,026

    17,981

    Other assets(1)

    796

    699

    Total assets

    $                     49,407

    $                     39,966

    Liabilities and stockholders’ equity

    Current liabilities:

    Accounts payable

    $                          196

    $                          176

    Partners payable

    217

    202

    Accrued expenses and other current liabilities

    1,449

    866

    Deferred revenue and deposits

    56

    66

    Current portion of capital lease obligations

    7

    114

       Total current liabilities

    1,925

    1,424

    Capital lease obligations, less current portion

    107

    119

    Other liabilities(1)

    3,157

    2,327

       Total liabilities

    5,189

    3,870

    Stockholders’ equity

    Common stock and additional paid-in capital

    34,886

    30,225

    Accumulated other comprehensive loss

    (455)

    (228)

    Retained earnings

    9,787

    6,099

       Total stockholders’ equity

    44,218

    36,096

    Total liabilities and stockholders’ equity

    $                     49,407

    $                     39,966

    (1)

    In November 2015, the FASB issued Accounting Standards Update No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (ASU 2015-17), which simplifies the presentation of deferred income taxes by requiring deferred tax assets and liabilities be classified as noncurrent on the balance sheet. We early adopted this standard retrospectively and reclassified $280 million of our current deferred tax assets to noncurrent deferred tax assets as of December 31, 2014. This resulted in net adjustments of $62 million increase and $218 milliondecrease to our noncurrent deferred tax assets and noncurrent deferred tax liability, respectively, on our December 31, 2014condensed consolidated balance sheet.

    FACEBOOK, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    (In millions)

    (Unaudited)

    Three Months Ended December 31,

    Year Ended
    December 31,

    2015

    2014

    2015

    2014

    Cash flows from operating activities

    Net income

    $ 1,562

    $      701

    $  3,688

    $   2,940

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

    Depreciation and amortization

    543

    433

    1,945

    1,243

    Lease abandonment

    —

    —

    —

    (31)

    Share-based compensation

    746

    845

    2,960

    1,786

    Deferred income taxes

    (123)

    (180)

    (795)

    (210)

    Tax benefit from share-based award activity

    566

    499

    1,721

    1,853

    Excess tax benefit from share-based award activity

    (566)

    (504)

    (1,721)

    (1,869)

    Other

    3

    2

    17

    7

    Changes in assets and liabilities:

    Accounts receivable

    (568)

    (346)

    (973)

    (610)

    Prepaid expenses and other current assets

    1

    (78)

    (144)

    (123)

    Other assets

    (7)

    (58)

    (3)

    (216)

    Accounts payable

    11

    19

    18

    31

    Partners payable

    (23)

    (6)

    17

    (28)

    Accrued expenses and other current liabilities

    222

    130

    513

    328

    Deferred revenue and deposits

    9

    7

    (9)

    10

    Other liabilities

    451

    119

    1,365

    346

    Net cash provided by operating activities

    2,827

    1,583

    8,599

    5,457

    Cash flows from investing activities

    Purchases of property and equipment

    (692)

    (517)

    (2,523)

    (1,831)

    Purchases of marketable securities

    (5,605)

    (2,889)

    (15,938)

    (9,104)

    Sales of marketable securities

    2,803

    1,047

    6,928

    8,438

    Maturities of marketable securities

    747

    199

    2,310

    1,909

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

    (4)

    (4,221)

    (313)

    (4,975)

    Change in restricted cash and deposits

    25

    (235)

    102

    (348)

    Other investing activities, net

    —

    —

    —

    (2)

    Net cash used in investing activities

    (2,726)

    (6,616)

    (9,434)

    (5,913)

    Cash flows from financing activities

    Taxes paid related to net share settlement

    —

    (70)

    (20)

    (73)

    Proceeds from exercise of stock options

    —

    11

    —

    18

    Principal payments on capital lease obligations

    (12)

    (44)

    (119)

    (243)

    Excess tax benefit from share-based award activity

    566

    504

    1,721

    1,869

    Net cash provided by financing activities

    554

    401

    1,582

    1,571

    Effect of exchange rate changes on cash and cash equivalents

    (56)

    (52)

    (155)

    (123)

    Net increase (decrease) in cash and cash equivalents

    599

    (4,684)

    592

    992

    Cash and cash equivalents at beginning of period

    4,308

    8,999

    4,315

    3,323

    Cash and cash equivalents at end of period

    $ 4,907

    $   4,315

    $  4,907

    $   4,315

    FACEBOOK, INC.

    CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    (In millions)

    (Unaudited)

    Three Months EndedDecember 31,

    Year Ended
    December 31,

    2015

    2014

    2015

    2014

    Supplemental cash flow data

    Cash paid during the period for:

    Interest

    $        2

    $           3

    $       10

    $        14

    Income taxes

    $      71

    $         77

    $     273

    $      184

    Cash received during the period for:

    Income taxes

    $         –

    $            –

    $         3

    $          6

    Non-cash investing and financing activities:

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

    $     (19)

    $         53

    $       88

    $        91

    Fair value of shares issued related to acquisitions of businesses

    $          –

    $  12,987

    $          –

    $ 14,344

    Promissory note payable issued in connection with an acquisition

    $          –

    $            –

    $     198

    $           –

    Reconciliation of Non-GAAP Results to Nearest GAAP Measures

    (In millions, except percentages and per share amounts)

    (Unaudited)

    Three Months Ended December 31,

    Year Ended
    December 31,

    2015

    2014

    2015

    2014

    GAAP revenue

    $  5,841

    $  3,851

    $  17,928

    $  12,466

       Foreign exchange effect on 2015 revenue using 2014 rates

    322

    1,185

    Revenue excluding foreign exchange effect

    $  6,163

    $  19,113

    GAAP revenue year-over-year change %

    52%

    44%

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

    60%

    53%

    GAAP advertising revenue

    $  5,637

    $  3,594

    $  17,079

    $  11,492

       Foreign exchange effect on 2015 advertising revenue using 2014 rates

    322

    1,185

    Advertising revenue excluding foreign exchange effect

    $  5,959

    $  18,264

    GAAP advertising revenue year-over-year change %

    57%

    49%

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

    66%

    59%

    GAAP costs and expenses

    $  3,281

    $  2,718

    $  11,703

    $    7,472

       Share-based compensation expense

    (746)

    (896)

    (2,969)

    (1,837)

       Payroll tax expenses related to share-based compensation

    (26)

    (13)

    (77)

    (57)

       Amortization of intangible assets

    (191)

    (177)

    (730)

    (319)

    Non-GAAP costs and expenses

    $  2,318

    $  1,632

    $    7,927

    $    5,259

    GAAP income from operations

    $  2,560

    $  1,133

    $    6,225

    $    4,994

       Share-based compensation expense

    746

    896

    2,969

    1,837

       Payroll tax expenses related to share-based compensation

    26

    13

    77

    57

       Amortization of intangible assets

    191

    177

    730

    319

    Non-GAAP income from operations

    $  3,523

    $  2,219

    $  10,001

    $    7,207

    GAAP net income

    $  1,562

    $     701

    $    3,688

    $    2,940

       Share-based compensation expense

    746

    896

    2,969

    1,837

       Payroll tax expenses related to share-based compensation

    26

    13

    77

    57

       Amortization of intangible assets

    191

    177

    730

    319

       Income tax adjustments

    (260)

    (269)

    (946)

    (440)

    Non-GAAP net income

    $  2,265

    $  1,518

    $    6,518

    $    4,713

    GAAP and Non-GAAP diluted shares

    2,878

    2,816

    2,853

    2,664

    GAAP diluted earnings per share

    $    0.54

    $    0.25

    $      1.29

    $      1.10

       Net income attributable to participating securities

    —

    —

    —

    (0.01)

       Non-GAAP adjustments to net income

    0.25

    0.29

    0.99

    0.68

    Non-GAAP diluted earnings per share

    $    0.79

    $    0.54

    $      2.28

    $      1.77

    GAAP operating margin

    44%

    29%

    35%

    40%

       Share-based compensation expense

    13%

    23%

    17%

    15%

       Payroll tax expenses related to share-based compensation

    —%

    —%

    —%

    —%

       Amortization of intangible assets

    3%

    5%

    4%

    3%

    Non-GAAP operating margin

    60%

    58%

    56%

    58%

    GAAP income before provision for income taxes

    $  2,557

    $  1,114

    $    6,194

    $    4,910

    GAAP provision for income taxes

    995

    413

    2,506

    1,970

    GAAP effective tax rate

    39%

    37%

    40%

    40%

    GAAP income before provision for income taxes

    $  2,557

    $  1,114

    $    6,194

    $    4,910

    Share-based compensation and related payroll tax expenses

    772

    909

    3,046

    1,894

    Amortization of intangible assets

    191

    177

    730

    319

    Non-GAAP income before provision for income taxes

    $  3,520

    $  2,200

    $    9,970

    $    7,123

    Non-GAAP provision for income taxes

    1,255

    682

    3,452

    2,410

    Non-GAAP effective tax rate

    36%

    31%

    35%

    34%

    Net cash provided by operating activities

    $  2,827

    $  1,583

    $    8,599

    $    5,457

       Purchases of property and equipment

    (692)

    (517)

    (2,523)

    (1,831)

    Free cash flow

    $  2,135

    $  1,066

    $    6,076

    $    3,626

     

    Image via Mark Zuckerberg (Facebook)

  • eBay Earnings Released, Active Buyer Base Grows 5%

    eBay Earnings Released, Active Buyer Base Grows 5%

    eBay just reported its earnings for the fourth quarter and full-year 2015. Highlights include gross merchandise volume of $21.9 billion, revenue of $2.3 billion, 5% growth in active buyer base (to 162 million), Non-GAAP and GAAP EPS per diluted share of $0.50 and $0.43, respectively, and a $550 million repurchase of common stock.

    eBay President and CEO Devin Wenig said, “We delivered solid fourth quarter results and continued to make progress against our key priorities. The quarter also marked the end of an extraordinary year during which we completed the spin-off of PayPal. We continue to grow our business and customer base while executing our plan to reposition eBay for long-term success.”

    Revenue and earnings were pretty close to Wall Street forecasts.

    Here’s the release in its entirety:

    SAN JOSE, Calif.–(BUSINESS WIRE)– eBay Inc. (NASDAQ: EBAY), a global commerce leader, today reported that gross merchandise volume (GMV) for the quarter ended December 31, 2015 was $21.9 billion, increasing 5% on a foreign exchange (FX) neutral basis and was flat year over year on an as-reported basis, reflecting the continued impact of a strong U.S. dollar. Revenue for the quarter was $2.3 billion, up 5% on an FX-Neutral basis and flat year over year on an as-reported basis, driving non-GAAP net income from continuing operations of $600 million, or $0.50 per diluted share, and GAAP net income from continuing operations of $523 million, or $0.43 per diluted share. During the quarter, the company generated $1.1 billion of operating cash flow from continuing operations and $1.0 billion of free cash flow from continuing operations. eBay also repurchased $550 million of its common stock and completed the divestiture of its Enterprise business on November 2, 2015.

    “We delivered solid fourth quarter results and continued to make progress against our key priorities,” said Devin Wenig, President and CEO of eBay Inc. “The quarter also marked the end of an extraordinary year during which we completed the spin-off of PayPal. We continue to grow our business and customer base while executing our plan to reposition eBay for long-term success.”

    Underlying total eBay Inc. performance, the Marketplace platform delivered $20.7 billion of GMV, resulting in $1.9 billion in revenue for the fourth quarter, up 1% on an FX-Neutral basis and down 3% on an as-reported basis. During the 2015 holiday shopping season, the Marketplace platform saw over 265 million transactions across 190 markets, as consumers around the world shopped for great deals and sought-after gifts. StubHub ended the year with strong momentum, driving GMV of $1.2 billion in the fourth quarter and $232 million of revenue, up 34%, aided by strength in the sports and concerts categories. Classifieds delivered another quarter of accelerating growth with revenue of $183 million, up 15% on an FX-Neutral basis and up 2% on an as-reported basis with strong performance in Germany and the United Kingdom.

    For the full year 2015, eBay Inc.’s commerce platforms continued to connect buyers and sellers around the world, with an active buyer base that grew by 8 million, to 162 million total active buyers, representing 5% growth. Total GMV was $82 billion, up 5% on an FX-Neutral basis and down 1% on an as-reported basis, reflecting the impact of a strong U.S. dollar. Revenue was $8.6 billion, growing 5% on an FX-Neutral basis and down 2% on an as-reported basis. The company delivered strong operating and free cash flow on a continuing operations basis, generating $2.9 billion and $2.2 billion, respectively, during 2015.

    The results of eBay Enterprise and PayPal are presented as discontinued operations, appearing net of tax in a single line in the company’s statement of income.

    Fourth Quarter and Full Year 2015 Financial Highlights (presented in millions, except per share data and percentages)
    Fourth Quarter Full Year
    2015 2014 Change 2015 2014 Change
    eBay Inc.
    Net revenues $2,322 $2,323 $(1) —% $8,592 $8,790 $(198) (2)%
    GAAP – Continuing Operations
    Income (loss) from continuing operations $523 $729 $(206) (28)% $1,947 $(865) $2,812 **
    Earnings (loss) per diluted share from continuing operations $0.43 $0.59 $(0.16) (26)% $1.60 $(0.69) $2.29 **
    Non-GAAP – Continuing Operations
    Net income (loss) $600 $685 $(85) (12)% $2,232 $2,386 $(154) (6)%
    Earnings (loss) per diluted share $0.50 $0.55 $(0.05) (10)% $1.83 $1.89 $(0.06) (3)%
    **Not meaningful

    Other Selected Financial and Operational Results

    • Operating margin — GAAP operating margin decreased to 28.5% for the fourth quarter of 2015, compared to 31.5% for the same period last year. Non-GAAP operating margin decreased to 34.4% in the fourth quarter, compared to 36.7% for the same period last year.
    • Taxes — The GAAP effective tax rate for continuing operations for the fourth quarter of 2015 was 19.5%, compared to 1.2% for the fourth quarter of 2014. The non-GAAP effective tax rate for continuing operations for the fourth quarter of 2015 was 23.8%, compared to 20.3% for the fourth quarter of 2014.
    • Cash flow — The company generated $1.1 billion of operating cash flow from continuing operations and $1.0 billion of free cash flow from continuing operations during the fourth quarter of 2015.
    • Stock repurchase program — The company repurchased approximately $550 million of its common stock, or 19.9 million shares, in the fourth quarter of 2015. The company’s total repurchase authorization remaining as of December 31, 2015 was $1.8 billion.
    • Cash and cash equivalents and non-equity investments — The company’s cash and cash equivalents and non-equity investments portfolio totaled $8.5 billion as of December 31, 2015.

    Business Outlook

    • First quarter 2016 — The company expects net revenue between $2.05 billion and $2.10 billion, representing FX-Neutral growth of 3% – 5%, with non-GAAP earnings per diluted share from continuing operations in the range of $0.43 – $0.45 and GAAP earnings per diluted share from continuing operations in the range of $0.37 – $0.39.
    • Full year 2016 — The company expects net revenue between $8.5 billion and $8.8 billion, representing FX-Neutral growth of 2% – 5%, with non-GAAP earnings per diluted share from continuing operations in the range of $1.82 – $1.87 and GAAP earnings per diluted share from continuing operations in the range of $1.55 – $1.60.

    Quarterly Conference Call and Webcast

    eBay Inc. will host a conference call to discuss fourth quarter 2015 results at 1:30 p.m. Pacific Time today. A live webcast of the conference call, together with a slide presentation that includes supplemental financial information and reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, can be accessed through the company’s Investor Relations website at https://investors.ebayinc.com. In addition, an archive of the webcast will be accessible for 90 days through the same link.

    eBay Inc. uses its Investor Relations website at https://investors.ebayinc.com as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD. Accordingly, investors should monitor, in addition to following press releases, SEC filings, public conference calls and webcasts.

    About eBay

    eBay Inc. (NASDAQ: EBAY) is a global commerce leader including the Marketplace, StubHub and Classifieds platforms. Collectively, we connect millions of buyers and sellers around the world, empowering people and creating opportunity through Connected Commerce. Founded in 1995 in San Jose, Calif., eBay is one of the world’s largest and most vibrant marketplaces for discovering great value and unique selection. In 2015, eBay enabled $82 billion of gross merchandise volume. For more information about the company and its global portfolio of online brands, visit www.ebayinc.com.

    Presentation

    All growth rates represent year over year comparisons, except as otherwise noted. All amounts in tables are presented in U.S. dollars, rounded to the nearest millions, except as otherwise noted. As a result, certain amounts may not sum or recalculate using the rounded dollar amounts provided.

    Non-GAAP Financial Measures

    This press release includes the following financial measures defined as “non-GAAP financial measures” by the Securities and Exchange Commission (SEC): non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating margin, non-GAAP effective tax rate and free cash flow. These non-GAAP financial measures are presented on a continuing operations basis. These measures may be different from non-GAAP financial measures used by other companies. The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for, the financial information prepared and presented in accordance with generally accepted accounting principles (GAAP). For a reconciliation of these non-GAAP financial measures to the nearest comparable GAAP measures, see “Business Outlook,” “Non-GAAP Measures of Financial Performance,” “Reconciliation of GAAP Operating Margin to Non-GAAP Operating Margin,” “Reconciliation of GAAP Net Income to Non-GAAP Net Income and Reconciliation of GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate” and “Reconciliation of Operating Cash Flow to Free Cash Flow” included in this press release.

    Forward-Looking Statements

    This press release contains forward-looking statements relating to, among other things, the future performance of eBay Inc. and its consolidated subsidiaries that are based on the company’s current expectations, forecasts and assumptions and involve risks and uncertainties. These statements include, but are not limited to, statements regarding the future performance of eBay Inc. and its consolidated subsidiaries, including expected financial results for the first quarter and full year 2016 and the future growth in our business. Actual results could differ materially from those predicted or implied and reported results should not be considered as an indication of future performance. Other factors that could cause or contribute to such differences include, but are not limited to: changes in political, business and economic conditions, any regional or general economic downturn or crisis and any conditions that affect ecommerce growth or cross-border trade; fluctuations in foreign currency exchange rates; the company’s need to successfully react to the increasing importance of mobile commerce and the increasing social aspect of commerce; an increasingly competitive environment for our business; changes to the company’s capital allocation or management of operating cash the company’s ability to manage its indebtedness, including managing exposure to interest rates and maintaining its credit ratings; the company’s need to manage an increasingly large enterprise with a broad range of businesses of varying degrees of maturity and in many different geographies; the company’s need and ability to manage regulatory, tax, data security and litigation risks; whether the operational, marketing and strategic benefits of the separation of the eBay and PayPal businesses can be achieved; the company’s ability to timely upgrade and develop its technology systems, infrastructure and customer service capabilities at reasonable cost while maintaining site stability and performance and adding new products and features; and the company’s ability to integrate, manage and grow businesses that have been acquired or may be acquired in the future.

    The forward-looking statements in this release do not include the potential impact of any acquisitions or divestitures that may be announced and/or completed after the date hereof.

    More information about factors that could affect the company’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the company’s most recent 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 website at https://investors.ebayinc.com or the SEC’s website atwww.sec.gov. All information in this release is as of January 27, 2016. Undue reliance should not be placed on the forward-looking statements in this press release, which are based on information available to the company on the date hereof. The company assumes no obligation to update such statements.

    eBay Inc.
    Unaudited Condensed Consolidated Balance Sheet
    December 31,
    2015    		 December 31,
    2014
    (In millions, except par value amounts)
    ASSETS
    Current assets:
    Cash and cash equivalents $ 1,832 $ 4,105
    Short-term investments 4,299 3,730
    Accounts receivable, net 619 600
    Other current assets 1,154 1,048
    Current assets of discontinued operations — 17,048
    Total current assets 7,904 26,531
    Long-term investments 3,391 5,736
    Property and equipment, net 1,554 1,486
    Goodwill 4,451 4,671
    Intangible assets, net 90 133
    Other assets 395 207
    Long-term assets of discontinued operations — 6,368
    Total assets $ 17,785 $ 45,132
    LIABILITIES AND STOCKHOLDERS’ EQUITY
    Current liabilities:
    Short-term debt $ — $ 850
    Accounts payable 349 107
    Accrued expenses and other current liabilities 1,736 3,830
    Deferred revenue 106 108
    Income taxes payable 72 125
    Current liabilities of discontinued operations — 12,511
    Total current liabilities 2,263 17,531
    Deferred and other tax liabilities, net 2,092 522
    Long-term debt 6,779 6,777
    Other liabilities 75 79
    Long-term liabilities of discontinued operations — 317
    Total liabilities 11,209 25,226
    Total stockholders’ equity 6,576 19,906
    Total liabilities and stockholders’ equity $ 17,785 $ 45,132
    eBay Inc.
    Unaudited Condensed Consolidated Statement of Income
    Three Months Ended
    December 31,    		 Year Ended
    December 31,
    2015 2014 2015 2014
    (In millions, except per share amounts)
    Net revenues $ 2,322 $ 2,323 $ 8,592 $ 8,790
    Cost of net revenues (1) 493 442 1,771 1,663
    Gross profit 1,829 1,881 6,821 7,127
    Operating expenses:
    Sales and marketing (1) 595 627 2,267 2,442
    Product development (1) 229 236 923 983
    General and administrative (1) 260 211 1,122 889
    Provision for transaction losses 72 66 271 262
    Amortization of acquired intangible assets 11 10 41 75
    Total operating expenses 1,167 1,150 4,624 4,651
    Income from operations 662 731 2,197 2,476
    Interest and other, net (12 ) 7 209 39
    Income from continuing operations before income taxes 650 738 2,406 2,515
    Provision for income taxes (127 ) (9 ) (459 ) (3,380 )
    Income (loss) from continuing operations $ 523 $ 729 $ 1,947 $ (865 )
    Income (loss) from discontinued operations, net of income taxes (2) (46 ) 294 (222 ) 911
    Net income $ 477 $ 1,023 $ 1,725 $ 46
    Income (loss) per share – basic:
    Continuing operations $ 0.44 $ 0.59 $ 1.61 $ (0.69 )
    Discontinued operations $ (0.04 ) $ 0.24 $ (0.18 ) $ 0.73
    Net income per share – basic $ 0.40 $ 0.83 $ 1.43 $ 0.04
    Income (loss) per share – diluted:
    Continuing operations $ 0.43 $ 0.59 $ 1.60 $ (0.69 )
    Discontinued operations $ (0.04 ) $ 0.23 $ (0.18 ) $ 0.73
    Net income per share – diluted $ 0.39 $ 0.82 $ 1.42 $ 0.04
    Weighted average shares:
    Basic 1,191 1,230 1,208 1,251
    Diluted 1,204 1,241 1,220 1,251
    (1) Includes stock-based compensation as follows:
    Cost of net revenues $ 10 $ 10 $ 38 $ 33
    Sales and marketing 19 22 94 93
    Product development 25 26 108 116
    General and administrative 24 35 139 102
    $ 78 $ 93 $ 379 $ 344
    (2)  Includes PayPal financial results from October 1, 2014 to December 31, 2014 for Fourth Quarter; January 1, 2015 to July 17, 2015 and January 1, 2014 toDecember 31, 2014 for Full Year; also includes the eBay Enterprise financial results from October 1, 2015 to November 2, 2015 and October 1, 2014 toDecember 31, 2014 for Fourth Quarter; January 1, 2015 to November 2, 2015 and January 1, 2014 to December 31, 2014 for Full Year.
    eBay Inc.
    Unaudited Condensed Consolidated Statement of Cash Flows
    Three Months Ended
    December 31,    		 Year Ended
    December 31,
    2015 2014 2015 2014
    (In millions)
    Cash flows from operating activities:
    Net income $ 477 $ 1,023 $ 1,725 $ 46
    (Income) loss from discontinued operations, net of income taxes 46 (294 ) 222 (911 )
    Adjustments:
    Provision for transaction losses 72 66 271 262
    Depreciation and amortization 171 164 687 682
    Stock-based compensation 78 93 379 344
    Gain on sale of investments 17 (9 ) (195 ) (12 )
    Deferred income taxes 83 (235 ) (32 ) 2,744
    Changes in assets and liabilities, net of acquisition effects 182 30 (180 ) 73
    Net cash provided by continuing operating activities 1,126 838 2,877 3,228
    Net cash provided by (used in) discontinued operating activities(1) (86 ) 803 1,156 2,449
    Net cash provided by operating activities 1,040 1,641 4,033 5,677
    Cash flows from investing activities:
    Purchases of property and equipment (129 ) (200 ) (668 ) (622 )
    Purchases of investments (2,292 ) (1,944 ) (6,744 ) (8,752 )
    Maturities and sales of investments 1,202 3,910 6,781 8,115
    Acquisitions, net of cash acquired — — (24 ) (55 )
    Other (3 ) (6 ) (18 ) (11 )
    Net cash provided by (used in) continuing investing activities (1,222 ) 1,760 (673 ) (1,325 )
    Net cash provided by (used in) discontinued investing activities(1) 899 (688 ) (2,938 ) (1,348 )
    Net cash provided by (used in) investing activities (323 ) 1,072 (3,611 ) (2,673 )
    Cash flows from financing activities:
    Proceeds from issuance of common stock 48 122 221 300
    Repurchases of common stock (637 ) (1,182 ) (2,149 ) (4,658 )
    Excess tax benefits from stock-based compensation 2 19 74 75
    Tax withholdings related to net share settlements of restricted stock units and awards (19 ) (28 ) (245 ) (252 )
    Proceeds from issuance of long-term debt, net — — — 3,482
    Repayment of debt (600 ) — (850 ) —
    Other (21 ) (2 ) (11 ) 6
    Net cash used in continuing financing activities (1,227 ) (1,071 ) (2,960 ) (1,047 )
    Net cash provided by (used in) discontinued financing activities(1) 5 6 (1,594 ) 25
    Net cash used in financing activities (1,222 ) (1,065 ) (4,554 ) (1,022 )
    Effect of exchange rate changes on cash and cash equivalents (78 ) (110 ) (364 ) (148 )
    Net (decrease) increase in cash and cash equivalents (583 ) 1,538 (4,496 ) 1,834
    Cash and cash equivalents at beginning of period 2,415 4,790 6,328 4,494
    Cash and cash equivalents at end of period 1,832 6,328 1,832 6,328
    Less: Cash and cash equivalents of discontinued operations – Enterprise — 29 — 29
    Less: Cash and cash equivalents of discontinued operations – PayPal — 2,194 — 2,194
    Cash and cash equivalents of continuing operations at end of period $ 1,832 $ 4,105 $ 1,832 $ 4,105
    (1)  Includes PayPal financial results from October 1, 2014 to December 31, 2014 for Fourth Quarter; January 1, 2015 to July 17, 2015 and January 1, 2014 toDecember 31, 2014 for Full Year; also includes the eBay Enterprise financial results from October 1, 2015 to November 2, 2015 and October 1, 2014 toDecember 31, 2014 for Fourth Quarter; January 1, 2015 to November 2, 2015 and January 1, 2014 to December 31, 2014 for Full Year.
    eBay Inc.
    Unaudited Summary of Consolidated Net Revenues
    Net Revenues by Type Three Months Ended
    December 31,
    2015    		 September 30,
    2015    		 June 30,
    2015    		 March 31,
    2015    		 December 31,
    2014
    (In millions, except percentages)
    Net Revenues by Type:
    Net transaction revenues:
    Marketplace $ 1,584 $ 1,459 $ 1,524 $ 1,536 $ 1,662
    Current quarter vs prior year quarter (5 )% (5 )% (3 )% (3 )% N/A
    Percent from international 63 % 62 % 62 % 60 % 63 %
    StubHub 232 200 161 132 174
    Current quarter vs prior year quarter 34 % 17 % 8 % (2 )% N/A
    Percent from international 1 % 2 % 2 % 2 % 1 %
    Total net transaction revenues 1,816 1,659 1,685 1,668 1,836
    Current quarter vs prior year quarter (1 )% (3 )% (2 )% (3 )% N/A
    Percent from international 55 % 54 % 56 % 55 % 57 %
    Marketing services and other revenues:
    Marketplace 326 266 251 235 312
    Current quarter vs prior year quarter 4 % — % (5 )% (10 )% N/A
    Percent from international 47 % 44 % 47 % 49 % 48 %
    Classifieds 183 178 180 162 180
    Current quarter vs prior year quarter 2 % (3 )% (4 )% (2 )% N/A
    Percent from international 100 % 100 % 100 % 100 % 100 %
    Corporate and other (3 ) (4 ) (6 ) (4 ) (5 )
    Total marketing services and other revenues 506 440 425 393 487
    Current quarter vs prior year quarter 4 % (2 )% (5 )% (8 )% N/A
    Percent from international 66 % 67 % 70 % 70 % 67 %
    Total net revenues $ 2,322 $ 2,099 $ 2,110 $ 2,061 $ 2,323
    Current quarter vs prior year quarter — % (2 )% (3 )% (4 )% N/A
    eBay Inc.
    Unaudited Supplemental Operating Data
    Three Months Ended
    December 31,
    2015    		 September 30,
    2015    		 June 30,
    2015    		 March 31,
    2015    		 December 31,
    2014
    (In millions, except percentages)
    Active Buyers (1) 162 159 157 156 154
    Current quarter vs prior year quarter 5 % 5 % 6 % 8 % 10 %
    Gross Merchandise Volume (2)
    Marketplace $20,676 $18,674 $19,273 $19,476 $20,883
    Current quarter vs prior year quarter (1 )% (3 )% (2 )% (2 )% 1 %
    StubHub $1,184 $927 $788 $675 $911
    Current quarter vs prior year quarter 30 % 10 % 1 % 6 % 2 %
    Total GMV $21,860 $19,601 $20,061 $20,151 $21,794
    Current quarter vs prior year quarter — % (2 )% (2 )% (2 )% 1 %
    (1) All buyers who successfully closed a transaction on our Marketplace and StubHub platforms within the previous 12-month period. Buyers may register more than once, and as a result, may have more than one account.
    (2) Total value of all successfully closed transactions between users on our Marketplace and StubHub platforms during the period regardless of whether the buyer and seller actually consummated the transaction. We believe that GMV provides a useful measure of the overall volume of closed transactions that flow through our platforms in a given period, notwithstanding the inclusion in GMV of closed transactions that are not ultimately consummated.

    eBay Inc.
    Business Outlook
    (In Millions, Except Per Share Amounts)

    The guidance figures provided below and elsewhere in this press release are forward-looking statements, reflect a number of estimates, assumptions and other uncertainties, and are approximate in nature because the company’s future performance is difficult to predict. Such guidance is based on information available on the date of this press release, and the company assumes no obligation to update it.

    The company’s future performance involves risks and uncertainties, and the company’s actual results could differ materially from the information below and elsewhere in this press release. Some of the factors that could affect the company’s operating results are set forth under the caption “Forward-Looking Statements” above in this press release. More information about factors that could affect the company’s operating results is included under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in its most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, copies of which may be obtained by visiting eBay’s investor relations website at https://investors.ebayinc.com or theSEC’s website at www.sec.gov.

    eBay Inc.
    Three Months Ending
    March 31, 2016
    (In millions, except per share amounts) GAAP Non-GAAP (a)
    Diluted EPS from continuing operations $0.37 – $0.39 $0.43 – $0.45
    Twelve Months Ending
    December 31, 2016
    GAAP Non-GAAP (b)
    (In millions, except per share amounts)
    Diluted EPS from continuing operations $1.55 – $1.60 $1.82 – $1.87
    (a) Estimated non-GAAP amounts above for the three months ending March 31, 2016, reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $10 – $15 million and estimated stock-based compensation expense and employer payroll taxes on stock-based compensation expense of approximately $85 – $95 million as well as the related tax impact.
    (b) Estimated non-GAAP amounts above for the twelve months ending December 31, 2016, reflect adjustments that exclude the estimated amortization of acquired intangible assets of approximately $35 – $45 million and estimated stock-based compensation expense and employer payroll taxes on stock-based compensation expense of approximately $410 – $430 million.

    eBay Inc.
    Non-GAAP Measures of Financial Performance

    To supplement the company’s condensed consolidated financial statements presented in accordance with generally accepted accounting principles, or GAAP, the company uses non-GAAP measures of certain components of financial performance. These non-GAAP measures include non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating margin, non-GAAP effective tax rate, and free cash flow. These non-GAAP financial measures are presented on a continuing operations basis.

    These non-GAAP measures are not in accordance with, or an alternative to, measures prepared in accordance with GAAP and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. Non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the company’s results of operations as determined in accordance with GAAP. These measures should only be used to evaluate the company’s results of operations in conjunction with the corresponding GAAP measures.

    Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release can be found in the tables included in this press release.

    These non-GAAP measures are provided to enhance investors’ overall understanding of the company’s current financial performance and its prospects for the future. Specifically, the company believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses, gains and losses, or net purchases of property and equipment, as the case may be, that may not be indicative of its core operating results and business outlook. In addition, because the company has historically reported certain non-GAAP results to investors, the company believes that the inclusion of non-GAAP measures provides consistency in the company’s financial reporting.

    For its internal budgeting process, and as discussed further below, the company’s management uses financial measures that do not include stock-based compensation expense, employer payroll taxes on stock-based compensation, amortization or impairment of acquired intangible assets, impairment of goodwill, significant gains or losses from the disposal/acquisition of a business, certain effects of the planned separation of our eBay and PayPal business, certain gains and losses on investments, restructuring-related charges and the income taxes associated with the foregoing. In addition to the corresponding GAAP measures, the company’s management also uses the foregoing non-GAAP measures in reviewing the financial results of the company.

    The company excludes the following items from non-GAAP net income, non-GAAP earnings per diluted share, non-GAAP operating margin and non-GAAP effective tax rate:

    Stock-based compensation expense and related employer payroll taxes. This expense consists of expenses for stock options, restricted stock and employee stock purchases. The company excludes stock-based compensation expense from its non-GAAP measures primarily because they are non-cash expenses that management does not believe are reflective of ongoing operating results. The related employer payroll taxes is dependent on the company’s stock price and the timing and size of exercises by employees of their stock options and the vesting of their restricted stock, over which management has limited to no control, and as such management does not believe it correlates to the company’s operation of the business.

    Amortization or impairment of acquired intangible assets, impairment of goodwill, significant gains or losses and transaction expenses from the acquisition or disposal of a business and certain gains or losses on investments. The company incurs amortization or impairment of acquired intangible assets and goodwill in connection with acquisitions and may incur significant gains or losses from the acquisition or disposal of a business and therefore excludes these amounts from its non-GAAP measures. The company also excludes certain gains and losses on investments. The company excludes the impact of the accretion of a note receivable associated with the disposal of certain businesses. The company excludes these items because management does not believe they correlate to the ongoing operating results of the company’s business.

    Restructuring. These charges consist of expenses for employee severance and other exit and disposal costs. The company excludes significant restructuring charges primarily because management does not believe they are reflective of ongoing operating results.

    Other certain significant gains, losses, or charges that are not indicative of the Company’s core operating results. These are significant gains, losses, or charges during a period that are the result of isolated events or transactions which have not occurred frequently in the past and are not expected to occur regularly or be repeated in the future. The company excludes these amounts from its results primarily because management does not believe they are indicative of its current or ongoing operating results.

    Separation. These are significant expenses that are related to the separation of our eBay and PayPal businesses into separate publicly traded companies. These consist primarily of third-party consulting fees, legal fees, employee retention payments, tax indemnifications and other expenses related to the separation.

    Tax effect of non-GAAP adjustments. This amount is used to present stock-based compensation and the other amounts described above on an after-tax basis consistent with the presentation of non-GAAP net income.

    In addition to the non-GAAP measures discussed above, the company also uses free cash flow. Free cash flow represents operating cash flows less purchases of property and equipment. The company considers free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business after the purchases of property, buildings, and equipment, which can then be used to, among other things, invest in the company’s business, make strategic acquisitions, and repurchase stock. A limitation of the utility of free cash flow as a measure of financial performance is that it does not represent the total increase or decrease in the company’s cash balance for the period.

    eBay Inc.
    Reconciliation of GAAP Operating Margin to Non-GAAP Operating Margin
    Three Months Ended Year Ended
    December 31,
    2015    		 December 31,
    2014    		 December 31,
    2015    		 December 31,
    2014
    (In millions, except percentages)
    GAAP operating income $ 662 $ 731 $ 2,197 $ 2,476
    Stock-based compensation expense and related employer payroll taxes 78 96 396 373
    Amortization of acquired intangible assets within cost of net revenues 5 8 25 34
    Amortization of acquired intangible assets within operating expenses 11 10 41 75
    Separation 43 7 160 7
    Restructuring and acquisition related — — 62 —
    Total non-GAAP operating income adjustments 137 121 684 489
    Non-GAAP operating income $ 799 $ 852 $ 2,881 $ 2,965
    Non-GAAP operating margin 34.4 % 36.7 % 33.5 % 33.7 %
    Reconciliation of GAAP Net Income to Non-GAAP Net Income and
    GAAP Effective Tax Rate to Non-GAAP Effective Tax Rate*
    Three Months Ended Year Ended
    December 31,
    2015    		 December 31,
    2014    		 December 31,
    2015    		 December 31,
    2014
    (In millions, except percentages)
    GAAP income from continuing operations before income taxes $ 650 $ 738 $ 2,406 $ 2,515
    GAAP provision for income taxes (127 ) (9 ) (459 ) (3,380 )
    GAAP net income from continuing operations $ 523 $ 729 $ 1,947 $ (865 )
    Non-GAAP adjustments to net income from continuing operations:
    Non-GAAP operating income from continuing operations adjustments (see table above) 137 121 684 489
    Gains or losses on investments — — (264 ) —
    Tax effect of non-GAAP adjustments (60 ) (165 ) (135 ) 2,762
    Non-GAAP net income from continuing operations $ 600 $ 685 $ 2,232 $ 2,386
    Diluted net income from continuing operations per share:
    GAAP $ 0.43 $ 0.59 $ 1.60 $ (0.69 )
    Non-GAAP $ 0.50 $ 0.55 $ 1.83 $ 1.89
    Shares used in GAAP diluted net income (loss) per-share calculation 1,204 1,241 1,220 1,251
    Shares used in non-GAAP diluted net income per-share calculation 1,204 1,241 1,220 1,262
    GAAP effective tax rate – Continuing operations 20 % 1 % 19 % 134 %
    Tax effect of non-GAAP adjustments to net income (loss) from continuing operations 4 % 19 % 2 % (113 )%
    Non-GAAP effective tax rate – Continuing Operations 24 % 20 % 21 % 21 %
    *Presented on a continuing operations basis
    Reconciliation of Operating Cash Flow to Free Cash Flow*
    Three Months Ended Year Ended
    December 31,
    2015    		 December 31,
    2014    		 December 31,
    2015    		 December 31,
    2014
    (In millions) (In millions)
    Net cash provided by continuing operating activities $ 1,126 $ 838 $ 2,877 $ 3,228
    Less: Purchases of property and equipment (129 ) (200 ) (668 ) (622 )
    Free cash flow from continuing operations $ 997 $ 638 $ 2,209 $ 2,606
     
    *Presented on a continuing operations basis

    eBay Inc.

    Image via eBay

  • Apple Earnings Released, Company Has ‘Biggest Quarter Ever’

    Apple Earnings Released, Company Has ‘Biggest Quarter Ever’

    Apple just announced its earnings for its fiscal 2016 first quarter ended December 26, 2015. Once again, the company announced record profit at $18.4 billion for the quarter.

    Apple also posted record quarterly revenue at $75.9 billion. Net income was $3.28 per diluted share.

    The company beat analysts expectations on profit, but missed on revenue.

    CEO Tim Cook said, “Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV. The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.”

    The company sold 74.8 million iPhones, 16.1 million iPads, and 5.31 Macs.

    Here’s the release in its entirety:

    Apple® today announced financial results for its fiscal 2016 first quarter ended December 26, 2015. The Company posted record quarterly revenue of $75.9 billion and record quarterly net income of $18.4 billion, or $3.28 per diluted share. These results compare to revenue of $74.6 billion and net income of $18 billion, or $3.06 per diluted share, in the year-ago quarter. Gross margin was 40.1 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 66 percent of the quarter’s revenue.

    “Our team delivered Apple’s biggest quarter ever, thanks to the world’s most innovative products and all-time record sales of iPhone, Apple Watch and Apple TV,” said Tim Cook, Apple’s CEO. “The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.”

    “Our record sales and strong margins drove all-time records for net income and EPS in spite of a very difficult macroeconomic environment,” said Luca Maestri, Apple’s CFO. “We generated operating cash flow of $27.5 billion during the quarter, and returned over $9 billion to investors through share repurchases and dividends. We have now completed $153 billion of our $200 billion capital return program.”

    Apple is providing the following guidance for its fiscal 2016 second quarter:
    • revenue between $50 billion and $53 billion
    • gross margin between 39 percent and 39.5 percent
    • operating expenses between $6 billion and $6.1 billion
    • other income/(expense) of $325 million
    • tax rate of 25.5 percent

    Apple’s board of directors has declared a cash dividend of $.52 per share of the Company’s common stock. The dividend is payable on February 11, 2016, to shareholders of record as of the close of business on February 8, 2016.

    Apple will provide live streaming of its Q1 2016 financial results conference call beginning at 2:00 p.m. PST on January 26, 2016 at www.apple.com/investor/earnings-call/. This webcast will also be available for replay for approximately two weeks thereafter.

    Q1’16 Earnings Supplemental Material

    This press release contains forward-looking statements including without limitation those about the Company’s estimated revenue, gross margin, operating expenses, other income/(expense), and tax rate. These statements involve risks and uncertainties, and actual results may differ. Risks and uncertainties include without limitation the effect of competitive and economic factors, and the Company’s reaction to those factors, on consumer and business buying decisions with respect to the Company’s products; continued competitive pressures in the marketplace; the ability of the Company to deliver to the marketplace and stimulate customer demand for new programs, products, and technological innovations on a timely basis; the effect that product introductions and transitions, changes in product pricing or mix, and/or increases in component costs could have on the Company’s gross margin; the inventory risk associated with the Company’s need to order or commit to order product components in advance of customer orders; the continued availability on acceptable terms, or at all, of certain components and services essential to the Company’s business currently obtained by the Company from sole or limited sources; the effect that the Company’s dependency on manufacturing and logistics services provided by third parties may have on the quality, quantity or cost of products manufactured or services rendered; risks associated with the Company’s international operations; the Company’s reliance on third-party intellectual property and digital content; the potential impact of a finding that the Company has infringed on the intellectual property rights of others; the Company’s dependency on the performance of distributors, carriers and other resellers of the Company’s products; the effect that product and service quality problems could have on the Company’s sales and operating profits; the continued service and availability of key executives and employees; war, terrorism, public health issues, natural disasters, and other circumstances that could disrupt supply, delivery, or demand of products; and unfavorable results of legal proceedings. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s public reports filed with the SEC, including the Company’s Form 10-K for the fiscal year ended September 26, 2015, and its Form 10-Q for the fiscal quarter ended December 26, 2015 to be filed with the SEC. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

    Apple revolutionized personal technology with the introduction of the Macintosh in 1984. Today, Apple leads the world in innovation with iPhone, iPad, Mac, Apple Watch and Apple TV. Apple’s four software platforms — iOS, OS X, watchOS and tvOS — provide seamless experiences across all Apple devices and empower people with breakthrough services including the App Store, Apple Music, Apple Pay and iCloud. Apple’s 100,000 employees are dedicated to making the best products on earth, and to leaving the world better than we found it.

    NOTE TO EDITORS: For additional information visit Apple’s PR website (www.apple.com/pr), or call Apple’s Media Helpline at (408) 974-2042.

    © 2016 Apple Inc. All rights reserved. Apple and the Apple logo are trademarks of Apple. Other company and product names may be trademarks of their respective owners.

    Apple Inc.

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

    (In millions, except number of shares which are reflected in thousands and per share amounts)
    Three Months Ended

    December 26,
    2015

    December 27,
    2014
    Net sales $ 75,872 $ 74,599
    Cost of sales (1) 45,449 44,858
    Gross margin 30,423 29,741
    Operating expenses:
    Research and development (1) 2,404 1,895
    Selling, general and administrative (1) 3,848 3,600
    Total operating expenses 6,252 5,495
    Operating income 24,171 24,246
    Other income/(expense), net 402 170
    Income before provision for income taxes 24,573 24,416
    Provision for income taxes 6,212 6,392
    Net income $ 18,361 $ 18,024
    Earnings per share:
    Basic $ 3.30 $ 3.08
    Diluted $ 3.28 $ 3.06
    Shares used in computing earnings per share:
    Basic 5,558,930 5,843,082
    Diluted 5,594,127 5,881,803
    Cash dividends declared per share $ 0.52 $ 0.47
    (1) Includes share-based compensation expense as follows:
    Cost of sales $ 204 $ 140
    Research and development $ 466 $ 374
    Selling, general and administrative $ 408 $ 374

    Apple Inc.

    UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

    (In millions, except number of shares which are reflected in thousands and par value)

    December 26,
    2015

    September 26,
    2015
    ASSETS:
    Current assets:
    Cash and cash equivalents $ 16,689 $ 21,120
    Short-term marketable securities 21,385 20,481
    Accounts receivable, less allowances of $63 in each period 12,953 16,849
    Inventories 2,451 2,349
    Vendor non-trade receivables 11,668 13,494
    Other current assets 11,073 15,085
    Total current assets 76,219 89,378
    Long-term marketable securities 177,665 164,065
    Property, plant and equipment, net 22,300 22,471
    Goodwill 5,202 5,116
    Acquired intangible assets, net 3,924 3,893
    Other non-current assets 7,974 5,556
    Total assets $ 293,284 $ 290,479
    LIABILITIES AND SHAREHOLDERS’ EQUITY:
    Current liabilities:
    Accounts payable $ 33,312 $ 35,490
    Accrued expenses 24,032 25,181
    Deferred revenue 8,989 8,940
    Commercial paper 7,259 8,499
    Current portion of long-term debt 2,500 2,500
    Total current liabilities 76,092 80,610
    Deferred revenue, non-current 3,546 3,624
    Long-term debt 53,204 53,463
    Other non-current liabilities 32,175 33,427
    Total liabilities 165,017 171,124
    Commitments and contingencies
    Shareholders’ equity:
    Common stock and additional paid-in capital, $0.00001 par value: 12,600,000 shares authorized; 5,544,487 and 5,578,753 shares issued and outstanding, respectively 28,253 27,416
    Retained earnings 101,494 92,284
    Accumulated other comprehensive income/(loss) (1,480) (345)
    Total shareholders’ equity 128,267 119,355
    Total liabilities and shareholders’ equity $ 293,284 $ 290,479

    Apple Inc.

    UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

    (In millions)
    Three Months Ended
    December 26, 2015 December 27, 2014
    Cash and cash equivalents, beginning of the period $ 21,120 $ 13,844
    Operating activities:
    Net income 18,361 18,024
    Adjustments to reconcile net income to cash generated by operating activities:
    Depreciation and amortization 2,954 2,575
    Share-based compensation expense 1,078 888
    Deferred income tax expense 1,592 2,197
    Changes in operating assets and liabilities:
    Accounts receivable, net 3,896 751
    Inventories (102) (172)
    Vendor non-trade receivables 1,826 (3,508)
    Other current and non-current assets (893) (1,648)
    Accounts payable (852) 9,003
    Deferred revenue (29) 945
    Other current and non-current liabilities (368) 4,667
    Cash generated by operating activities 27,463 33,722
    Investing activities:
    Purchases of marketable securities (47,836) (44,915)
    Proceeds from maturities of marketable securities 3,514 2,807
    Proceeds from sales of marketable securities 28,262 24,166
    Payments made in connection with business acquisitions, net (86) (23)
    Payments for acquisition of property, plant and equipment (3,612) (3,217)
    Payments for acquisition of intangible assets (394) (48)
    Other (298) 65
    Cash used in investing activities (20,450) (21,165)
    Financing activities:
    Proceeds from issuance of common stock 1 80
    Excess tax benefits from equity awards 224 264
    Payments for taxes related to net share settlement of equity awards (597) (512)
    Payments for dividends and dividend equivalents (2,969) (2,801)
    Repurchase of common stock (6,863) (5,030)
    Proceeds from issuance of term debt, net 0 3,485
    Change in commercial paper, net (1,240) (2,409)
    Cash used in financing activities (11,444) (6,923)
    Increase/(decrease) in cash and cash equivalents (4,431) 5,634
    Cash and cash equivalents, end of the period $ 16,689 $ 19,478
    Supplemental cash flow disclosure:
    Cash paid for income taxes, net $ 3,398 $ 3,869
    Cash paid for interest $ 396 $ 202
    Apple Inc.
    Q1 2016 Unaudited Summary Data
    (Units in thousands, Revenue in millions)
    Q1 2016 Q4 2015 Q1 2015 Sequential Change Year/Year Change
    Operating Segments Revenue Revenue Revenue Revenue Revenue
    Americas $29,325 $21,773 $30,566 35% – 4%
    Europe 17,932 10,577 17,214 70% 4%
    Greater China 18,373 12,518 16,144 47% 14%
    Japan 4,794 3,929 5,448 22% – 12%
    Rest of Asia Pacific 5,448 2,704 5,227 101% 4%
    Total Apple $75,872 $51,501 $74,599 47% 2%
    Q1 2016 Q4 2015 Q1 2015 Sequential Change Year/Year Change
    Product Summary Units Revenue Units Revenue Units Revenue Units Revenue Units Revenue
    iPhone (1) 74,779 $51,635 48,046 $32,209 74,468 $51,182 56% 60% 0% 1%
    iPad (1) 16,122 7,084 9,883 4,276 21,419 8,985 63% 66% – 25% – 21%
    Mac (1) 5,312 6,746 5,709 6,882 5,519 6,944

    – 7%

    		 – 2% – 4% – 3%
    Services (2) 6,056 5,086 4,799 19% 26%
    Other Products (1)(3) 4,351 3,048 2,689 43% 62%
    Total Apple $75,872 $51,501 $74,599 47% 2%

    (1)

    Includes deferrals and amortization of related software upgrade rights and non-software services.

    (2)

    Includes revenue from Internet Services, AppleCare, Apple Pay, licensing and other services.

    (3)

    Includes sales of Apple TV, Apple Watch, Beats products, iPod and Apple-branded and third-party accessories.

    Image via Wikimedia Commons