Meta Platforms Inc

Previous wording

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we present revenue on a constant currency basis, which is a non-GAAP financial measure. Revenue on a constant currency basis is presented in the section entitled "—Revenue—Foreign Exchange Impact on Revenue." To calculate revenue on a constant currency basis, we translated revenue for the three and six months ended June 30, 2024 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar.

Current wording

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (GAAP), we present revenue on a constant currency basis, which is a non-GAAP financial measure. Revenue on a constant currency basis is presented in the section entitled "—Revenue—Foreign Exchange Impact on Revenue." To calculate revenue on a constant currency basis, we translated revenue for the three and nine months ended September 30, 2024 using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar.

Previous wording

Our financial results and key Family metrics for the second quarter of 2024 are set forth below. Total revenue for the second quarter of 2024 was $39.07 billion, an increase of 22% compared to the second quarter of 2023, due to an increase in advertising revenue. Revenue on a constant currency basis would have increased 23% compared to the second quarter of 2023. Ad impressions delivered across our Family of Apps in the second quarter of 2024 increased 10% year-over-year, and our average price per ad in the second quarter of 2024 increased 10% year-over-year.

Current wording

Our financial results and key Family metrics for the third quarter of 2024 are set forth below. Total revenue for the third quarter of 2024 was $40.59 billion, an increase of 19% compared to the third quarter of 2023, due to an increase in advertising revenue. Revenue on a constant currency basis would have increased 20% compared to the third quarter of 2023. Ad impressions delivered across our Family of Apps in the third quarter of 2024 increased 7% year-over-year, and our average price per ad in the third quarter of 2024 increased 11% year-over-year.

Previous wording

•Net income was $13.47 billion, with diluted earnings per share (EPS) of $5.16 for the three months ended June 30, 2024.

Current wording

•Net income was $15.69 billion, with diluted earnings per share (EPS) of $6.03 for the three months ended September 30, 2024.

Previous wording

•Capital expenditures, including principal payments on finance leases, were $8.47 billion for the three months ended June 30, 2024.

Current wording

•Capital expenditures, including principal payments on finance leases, were $9.20 billion for the three months ended September 30, 2024.

Previous wording

•Share repurchases were $6.32 billion of our Class A common stock and dividend payments were $1.27 billion for the three months ended June 30, 2024.

Current wording

•Share repurchases were $8.86 billion of our Class A common stock and total dividend and dividend equivalent payments were $1.26 billion for the three months ended September 30, 2024.

Previous wording

•Cash, cash equivalents, and marketable securities were $58.08 billion as of June 30, 2024.

Current wording

•Cash, cash equivalents, and marketable securities were $70.90 billion as of September 30, 2024.

Previous wording

•Family daily active people (DAP) was 3.27 billion on average for June 2024, an increase of 7% year-over-year.

Current wording

•Family daily active people (DAP) was 3.29 billion on average for September 2024, an increase of 5% year-over-year.

Previous wording

•Ad impressions delivered across our Family of Apps in the second quarter of 2024 increased by 10% year-over-year.

Current wording

•Ad impressions delivered across our Family of Apps in the third quarter of 2024 increased by 7% year-over-year.

Previous wording

•Average price per ad in the second quarter of 2024 increased by 10% year-over-year.

Current wording

•Average price per ad in the third quarter of 2024 increased by 11% year-over-year.

Previous wording

In particular, legislative and regulatory developments such as the General Data Protection Regulation, including its evolving interpretation through decisions of the Court of Justice of the European Union, ePrivacy Directive, European Digital Services Act, Digital Markets Act, and U.S. state privacy laws including the California Consumer Privacy Act, as amended by the California Privacy Rights Act, have impacted our ability to use data signals in our ad products, and we expect these and other developments will have further impact in the future. As a result, we have implemented, and we will continue to implement, whether voluntarily or otherwise, changes to our products and user data practices, which reduce our ability to effectively target and measure ads. For example, in response to regulatory developments in Europe, we announced our plans to change the legal basis for behavioral advertising on Facebook and Instagram in the EU, European Economic Area, and Switzerland from "legitimate interests" to "consent," and began offering users in the region a "subscription for no ads" alternative. We are engaging with regulators on our consent model. In addition, mobile operating system and browser providers, such as Apple and Google, have implemented product changes and/or announced future plans to limit the ability of websites and application developers to collect and use these signals to target and measure advertising. For example, in 2021, Apple made certain changes to its products and data use policies in connection with changes to its iOS operating system that reduce our and other iOS developers' ability to target and measure advertising, which has negatively impacted, and we expect will continue to negatively impact, the size of the budgets marketers are willing to commit to us and other advertising platforms.

Current wording

In particular, legislative and regulatory developments such as the General Data Protection Regulation, including its evolving interpretation through decisions of the Court of Justice of the European Union, ePrivacy Directive, European Digital Services Act, Digital Markets Act, and U.S. state privacy laws including the California Consumer Privacy Act, as amended by the California Privacy Rights Act, have impacted our ability to use data signals in our ad products, and we expect these and other developments will have further impact in the future. As a result, we have implemented, and we will continue to implement, whether voluntarily or otherwise, changes to our products and user data practices, which reduce our ability to effectively target and measure ads. For example, in response to regulatory developments in Europe, we announced our plans to change the legal basis for behavioral advertising on Facebook and Instagram in the EU, European Economic Area, and Switzerland from "legitimate interests" to "consent," and began offering users in the region a "subscription for no ads" alternative. We are engaging with regulators on our consent model. In addition, mobile operating system and browser providers, such as Apple and Google, have implemented product changes and/or announced future plans to limit the ability of websites and application developers to collect and use these signals to target and measure advertising. For example, in 2021,

Previous wording

Other global and regional business, macroeconomic, and geopolitical conditions also have had, and we believe will continue to have, an impact on our user growth and engagement and advertising revenue. In particular, we believe advertising budgets have been pressured from time to time by factors such as inflation, rising interest rates, and related market uncertainty, which has led to reduced marketer spending. While we saw improvement in business and macroeconomic conditions in recent periods, continued business, macroeconomic, and geopolitical uncertainty remains, which could impact our financial results in future periods. In addition, competitive products and services have reduced some users' engagement with our products and services. We are investing in Reels and in AI initiatives across our products, including our AI-powered discovery engine to recommend relevant content, which we have already seen results in improved user engagement and monetization of our products. While Reels is growing in usage, it monetizes at a lower rate than our Feed and Stories products and we expect it will continue to monetize at a lower rate for the foreseeable future. We also have seen fluctuations and declines in the size of our active user base in one or more regions from time to time. For example, in connection with the war in Ukraine, access to Facebook and Instagram was restricted in Russia and the services were then prohibited by the Russian government, which continued to adversely affect user growth and engagement in the second quarter of 2024. These trends adversely affected advertising revenue in the second quarter of 2024, and we expect will continue to affect our advertising revenue in the foreseeable future.

Current wording

Other global and regional business, macroeconomic, and geopolitical conditions also have had, and we believe will continue to have, an impact on our user growth and engagement and advertising revenue. In particular, we believe advertising budgets have been pressured from time to time by factors such as inflation, high interest rates, and related market uncertainty, which has led to reduced marketer spending. While we saw improvement in business and macroeconomic conditions in recent periods, continued business, macroeconomic, and geopolitical uncertainty remains, which could impact our financial results in future periods. In addition, competitive products and services have reduced some users' engagement with our products and services. We are investing in Reels and in AI initiatives across our products, including our AI-powered discovery engine to recommend relevant content, which we have already seen results in improved user engagement and monetization of our products. While Reels is growing in usage, it monetizes at a lower rate than our Feed and Stories products and we expect it will continue to monetize at a lower rate for the foreseeable future. We also have seen fluctuations and declines in the size of our active user base in one or more regions from time to time. For example, in connection with the war in Ukraine, access to Facebook and Instagram was restricted in Russia and the services were then prohibited by the Russian government, which continued to adversely affect user growth and engagement in the third quarter of 2024. These trends adversely affected advertising revenue in the third quarter of 2024, and we expect will continue to affect our advertising revenue in the foreseeable future.

Previous wording

We expect to continue to build on the discipline and habits that we developed in 2022 when we initiated several efforts to increase our operating efficiency, while still remaining focused on investing in significant opportunities. In the six months ended June 30, 2024, 81% of our total costs and expenses were recognized in FoA and 19% were recognized in RL. Our FoA investments include expenses relating to headcount, data centers, and technical infrastructure as part of our efforts to develop our apps and our advertising services. These efforts include significant investments in AI initiatives, including to recommend relevant content across our products, enhance our advertising tools, develop new products, and develop new features for existing products using generative AI. In particular, we expect our AI initiatives will require increased investment in infrastructure and headcount.

Current wording

We expect to continue to build on the discipline and habits that we developed in 2022 when we initiated several efforts to increase our operating efficiency, while still remaining focused on investing in significant opportunities. In the nine months ended September 30, 2024, 80% of our total costs and expenses were recognized in FoA and 20% were recognized in RL. Our FoA investments include expenses relating to headcount, data centers, and technical infrastructure as part of our efforts to develop our apps and our advertising services. These efforts include significant investments in AI initiatives, including to recommend relevant content across our products, enhance our advertising tools, develop new products, and develop new features for existing products using generative AI. In particular, we expect our AI initiatives will require increased investment in infrastructure and headcount.

Previous wording

We are also making significant investments in our metaverse efforts, including developing virtual, augmented, and mixed reality devices, software for social platforms, neural interfaces, and other foundational technologies for the metaverse. Our RL investments include expenses relating to technology development across these efforts. Many of our RL investments are directed toward long-term, cutting-edge research and development for products for the metaverse that may only be fully realized in the next decade. During the six months ended June 30, 2024, our RL segment reduced our overall operating profit by approximately $8.33 billion, and we continue to expect our RL operating losses to increase meaningfully in 2024. We expect this will be a complex, evolving, and long-term initiative, and our ability to support our metaverse efforts is dependent on generating sufficient profits from other areas of our business. We are investing now because we believe this is the next chapter of the internet and will unlock monetization opportunities for businesses, developers, and creators, including around advertising, hardware, and digital goods.

Current wording

We are also making significant investments in our metaverse efforts, including developing virtual, augmented, and mixed reality devices, software for social platforms, neural interfaces, and other foundational technologies for the metaverse. Our RL investments include expenses relating to technology development across these efforts. Many of our RL investments are directed toward long-term, cutting-edge research and development for products for the metaverse that may only be fully realized in the next decade. During the nine months ended September 30, 2024, our RL segment reduced our overall operating profit by approximately $12.76 billion, and we continue to expect our RL operating losses to increase meaningfully in 2024. We expect this will be a complex, evolving, and long-term initiative, and our ability to support our metaverse efforts is dependent on generating sufficient profits from other areas of our business. We are investing now because we believe this is the next chapter of the internet and will unlock monetization opportunities for businesses, developers, and creators, including around advertising, hardware, and digital goods.

Previous wording

We calculate our revenue by user geography based on our estimate of the geography in which ad impressions are delivered, virtual and digital goods are purchased, or consumer hardware products are shipped. The geography of our users affects our revenue and financial results. Our revenue in regions such as United States & Canada and Europe is relatively higher primarily due to the size and maturity of those online and mobile advertising markets, and ad impression growth is primarily in geographies that monetize at lower rates, such as Asia-Pacific and Rest of World. In the second quarter of 2024, revenue increased by 17% in United States & Canada, 27% in Europe, 21% in Asia-Pacific, and 35% in Rest of World, in each case relative to the same period in 2023.

Current wording

We calculate our revenue by user geography based on our estimate of the geography in which ad impressions are delivered, virtual and digital goods are purchased, or consumer hardware products are shipped. The geography of our users affects our revenue and financial results. Our revenue in regions such as United States & Canada and Europe is relatively higher primarily due to the size and maturity of those online and mobile advertising markets, and ad impression growth is primarily in geographies that monetize at lower rates, such as Asia-Pacific and Rest of World. In the third quarter of 2024, revenue increased by 16% in United States & Canada, 22% in Europe, 19% in Asia-Pacific, and 24% in Rest of World, in each case relative to the same period in 2023.

Previous wording

Worldwide DAP increased 7% to 3.27 billion on average during June 2024 from 3.07 billion during June 2023.

Current wording

Worldwide DAP increased 5% to 3.29 billion on average during September 2024 from 3.14 billion during September 2023.

Previous wording

During the second quarter of 2024, worldwide ARPP was $11.89, an increase of 14% from the second quarter of 2023.

Current wording

During the third quarter of 2024, worldwide ARPP was $12.29, an increase of 12% from the third quarter of 2023.

Previous wording

RL revenue is generated from the delivery of consumer hardware products, such as Meta Quest, wearables, and related software and content.

Current wording

RL revenue is generated from the delivery of consumer hardware products, such as Meta Quest and Ray-Ban Meta, and related software and content.

Previous wording

FoA revenue in the three and six months ended June 30, 2024 increased $7.00 billion, or 22%, and $14.70 billion, or 24%, respectively, compared to the same periods in 2023. The increases were almost entirely driven by advertising revenue.

Current wording

FoA revenue in the three and nine months ended September 30, 2024 increased $6.38 billion, or 19%, and $21.09 billion, or 22%, respectively, compared to the same periods in 2023. The increases were almost entirely driven by advertising revenue.

Previous wording

Advertising revenue in the three and six months ended June 30, 2024 increased $6.83 billion, or 22%, and $14.37 billion, or 24%, respectively, compared to the same periods in 2023 due to increases in ad impressions delivered and average price per ad. During the three and six months ended June 30, 2024, ad impressions delivered increased by 10% and 15%, respectively, year-over-year, as compared with increases of 34% and 30%, respectively, in the same periods in 2023 as ad impressions grew in all regions, especially in Asia-Pacific and Rest of World. The increases in ad impressions delivered were mostly driven by an increase in users and their engagement on our products. During the three and six months ended June 30, 2024, the average price per ad increased by 10% and 8%, respectively, year-over-year, as compared with decreases of 16% and 17%, respectively, in the same periods in 2023. The increases in average price per ad were driven by an increase in advertising demand which we believe is primarily due to ongoing improvements to our ad performance from our ad targeting and measurement tools. These increases were partially offset by a higher number of ad impressions delivered, especially in geographies and in products, such as Reels, that monetize at lower rates. Other factors are discussed in the section entitled "—Executive Overview of Second Quarter Results." In addition, year-over-year advertising revenue growth during the three and six months ended June 30, 2024 were mainly driven by increases in marketer spending in online commerce, gaming, as well as entertainment and media. We anticipate that future advertising revenue will be driven by a combination of price and ad impressions delivered.

Current wording

Advertising revenue in the three and nine months ended September 30, 2024 increased $6.24 billion, or 19%, and $20.61 billion, or 22%, respectively, compared to the same periods in 2023 due to increases in ad impressions delivered and average price per ad. During the three and nine months ended September 30, 2024, ad impressions delivered increased by 7% and 12%, respectively, year-over-year, as compared with increases of 31% and 30%, respectively, in the same periods in 2023 as ad impressions grew in all regions, especially in Asia-Pacific and Rest of World. The increases in ad impressions delivered were mostly driven by an increase in users and their engagement on our products. During the three and nine months ended September 30, 2024, the average price per ad increased by 11% and 9%, respectively, year-over-year, as compared with decreases of 6% and 13%, respectively, in the same periods in 2023. The increases in average price per ad were driven by an increase in advertising demand which we believe is primarily due to ongoing improvements to our ad performance from our ad targeting and measurement tools. These increases were partially offset by a higher number of ad impressions delivered, especially in geographies and in products, such as Reels, that monetize at lower rates. Other factors are discussed in the section entitled "—Executive Overview of Third Quarter Results." In addition, year-over-year advertising revenue growth during the nine months ended September 30, 2024 was mainly driven by increases in marketer spending in online commerce, entertainment and media, and consumer packaged goods. We anticipate that future advertising revenue will be driven by a combination of price and ad impressions delivered.

Previous wording

FoA other revenue in the three and six months ended June 30, 2024 increased $164 million, or 73%, and $339 million, or 79%, respectively, compared to the same periods in 2023. The increases were primarily driven by WhatsApp Business Platform revenue.

Current wording

FoA other revenue in the three and nine months ended September 30, 2024 increased $141 million, or 48%, and $479 million, or 66%, respectively, compared to the same periods in 2023. The increases were primarily driven by WhatsApp Business Platform revenue.

Previous wording

RL revenue in the three and six months ended June 30, 2024 increased $77 million, or 28%, and $177 million, or 29%, respectively, compared to the same periods in 2023. The increases in RL revenue were driven by a net increase in the volume of Meta Quest sales.

Current wording

RL revenue in the three and nine months ended September 30, 2024 increased $60 million and $238 million, respectively, or 29% in both periods, compared to the same periods in 2023. The increases in RL revenue were mostly due to increases in our consumer hardware products sold.

Previous wording

Changes in foreign exchange rates had an unfavorable impact on our revenue in the three and six months ended June 30, 2024 compared to the same periods in 2023. To calculate revenue on a constant currency basis, we translated revenue using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar. Using these constant rates, for the three months ended June 30, 2024, our total revenue and advertising revenue would have been $39.44 billion and $38.70 billion, which were $371 million and $367 million higher than actual total revenue and advertising revenue, respectively. Using these constant rates, for the six months ended June 30, 2024, our total revenue and advertising revenue would have been $75.79 billion and $74.23 billion, which were $265 million and $261 million higher than actual total revenue and advertising revenue, respectively.

Current wording

Changes in foreign exchange rates had an unfavorable impact on our revenue in the three and nine months ended September 30, 2024 compared to the same periods in 2023. To calculate revenue on a constant currency basis, we translated revenue using the prior year's monthly exchange rates for our settlement or billing currencies other than the U.S. dollar. Using these constant rates, for the three months ended September 30, 2024, our total revenue and advertising revenue would have been $41.13 billion and $40.42 billion, which were $544 million and $538 million higher than actual total revenue and advertising revenue, respectively. Using these constant rates, for the nine months ended September 30, 2024, our total revenue and advertising revenue would have been $116.92 billion and $114.65 billion, which were $809 million and $799 million higher than actual total revenue and advertising revenue, respectively.

Previous wording

Cost of revenue in the three and six months ended June 30, 2024 increased $1.36 billion, or 23%, and $1.89 billion, or 16%, respectively, compared to the same periods in 2023. The increases were primarily due to increases in operational expenses related to our data centers and technical infrastructure, mostly from higher depreciation expense. In the three months ended June 30, 2024, the increase was also driven by higher RL inventory costs.

Current wording

Cost of revenue in the three and nine months ended September 30, 2024 increased $1.17 billion, or 19%, and $3.06 billion, or 17%, respectively, compared to the same periods in 2023. The increases were primarily due to increases in operational expenses related to our data centers and technical infrastructure, mostly from higher depreciation expense.

Previous wording

Research and development expenses in the three and six months ended June 30, 2024 increased $1.19 billion, or 13%, or $1.79 billion, or 10%, respectively, compared to the same periods in 2023. The increases were mostly due to higher payroll and related expenses and infrastructure costs for research and development, partially offset by lower restructuring charges.

Current wording

Research and development expenses in the three and nine months ended September 30, 2024 increased $1.94 billion, or 21%, and $3.73 billion, or 13%, respectively, compared to the same periods in 2023. The increases were mostly due to higher payroll and related expenses as well as infrastructure costs for research and development, partially offset by lower restructuring charges.

Previous wording

The higher payroll and related expenses were mainly from a 9% growth in employee headcount from June 30, 2023 to June 30, 2024 in engineering and other technical functions supporting our continued investment in our family of products and Reality Labs.

Current wording

The higher payroll and related expenses were mainly from a 12% growth in employee headcount from September 30, 2023 to September 30, 2024 in engineering and other technical functions supporting our continued investment in our family of products and Reality Labs.

Previous wording

Marketing and sales expenses in the three and six months ended June 30, 2024 decreased $433 million, or 14%, and $913 million, or 15%, respectively, compared to the same periods in 2023. The decreases were mainly due to decreases in restructuring charges and payroll and related expenses. In the six months ended June 30, 2024, the decrease was also driven by a decrease in product and community operations expenses.

Current wording

Marketing and sales expenses in the three and nine months ended September 30, 2024 decreased $55 million, or 2%, and $968 million, or 11%, respectively, compared to the same periods in 2023. The decreases were mainly due to lower restructuring charges. To a lesser extent, lower professional services and payroll and related expenses also contributed to the decrease in the nine months ended September 30, 2024.

Previous wording

General and administrative expenses in the three months ended June 30, 2024 decreased $506 million, or 12%, compared to the same period in 2023. The decrease was mostly due to lower legal-related costs.

Current wording

General and administrative expenses in the three months ended September 30, 2024 decreased $205 million, or 10%, compared to the same period in 2023. The decrease was primarily due to lower legal-related costs.

Previous wording

General and administrative expenses in the six months ended June 30, 2024 increased $65 million, or 1%, compared to the same period in 2023. The increase was driven by increases in other taxes and legal-related costs, partially offset by lower restructuring charges.

Current wording

General and administrative expenses in the nine months ended September 30, 2024 decreased $141 million, or 2%, compared to the same period in 2023. The decrease was mostly due to lower restructuring charges, partially offset by an increase in other taxes.

Previous wording

FoA income from operations in the three and six months ended June 30, 2024 increased $6.20 billion, or 47%, and $12.65 billion, or 52%, respectively, compared to the same periods in 2023. The increases in FoA income from operations were driven by higher advertising revenue which was partially offset by increases in costs and expenses. The increases in costs and expenses were mainly due to increases in operational expenses related to our data centers and technical infrastructure, mostly from higher depreciation expense as well as payroll and related costs. These increases were partially offset by lower restructuring charges.

Current wording

FoA income from operations in the three and nine months ended September 30, 2024 increased $4.29 billion, or 25%, and $16.94 billion, or 40%, respectively, compared to the same periods in 2023. The increases in FoA income from operations were driven by higher advertising revenue which was partially offset by increases in costs and expenses. The increases in costs and expenses were primarily due to increases in operational expenses related to our data centers and technical infrastructure, mostly from higher depreciation expense, and payroll and related costs, partially offset by lower restructuring charges. Additionally, in the three months ended September 30, 2024, the increases were also partially offset by lower legal-related costs.

Previous wording

RL loss from operations in the three and six months ended June 30, 2024 increased $749 million, or 20%, and $602 million, or 8%, respectively, compared to the same periods in 2023, driven by increases in RL costs and expenses. RL costs and expenses increased primarily due to higher payroll and related costs. In the three months ended June 30, 2024, the increase was also driven by an increase in RL inventory costs.

Current wording

RL loss from operations in the three and nine months ended September 30, 2024 increased $686 million, or 18%, and $1.29 billion, or 11%, respectively, compared to the same periods in 2023, driven by increases in RL costs and expenses. RL costs and expenses increased mostly due to increases in payroll and related expenses and infrastructure costs.

Previous wording

Interest and other income (expense), net

Current wording

Interest and other income, net

Previous wording

Interest and other income (expense), net in the three and six months ended June 30, 2024 increased $358 million and $643 million, respectively, compared to the same periods in 2023. The increases in interest income were due to a combination of higher balances and higher interest rates, compared to the same periods in 2023.

Current wording

Interest and other income, net in the three and nine months ended September 30, 2024 increased $200 million and $841 million, respectively, compared to the same periods in 2023. The increases in interest income were due to a combination of higher balances and interest rates, compared to the same periods in 2023.

Previous wording

Our effective tax rate decreased in the three and six months ended June 30, 2024 compared to the same periods in 2023, primarily due to excess tax benefits recognized from share-based compensation.

Current wording

Our effective tax rate decreased in the three and nine months ended September 30, 2024 compared to the same periods in 2023, mostly due to excess tax benefits recognized from share-based compensation and an increase in research tax credits.

Previous wording

The accounting for share-based compensation may increase or decrease our effective tax rate based upon the difference between our share-based compensation expense and the deductions taken on our tax return, which depend upon the stock price at the time of employee award vesting. If our stock price remains constant to the July 26, 2024 price, and absent any changes to our tax landscape, we expect our effective tax rate for the full year 2024 to be in the mid-teens. This includes the effects of the mandatory capitalization and amortization of research and development expenses incurred in 2024, as required by the 2017 Tax Cuts and Jobs Act (Tax Act). The mandatory capitalization requirement increases our 2024 cash tax liabilities materially but also decreases our effective tax rate due to increasing the foreign-derived intangible income deduction. If the mandatory capitalization is deferred, our effective tax rate in 2024 could be higher when compared to current law and our cash tax liabilities could be lower.

Current wording

The accounting for share-based compensation may increase or decrease our effective tax rate based upon the difference between our share-based compensation expense and the deductions taken on our tax return, which depend upon the stock price at the time of employee award vesting. If our stock price remains constant to the October 25, 2024 price, and absent any changes to our tax landscape, we expect our effective tax rate for the fourth quarter of 2024 to be in the low-teens. This includes the effects of the mandatory capitalization and amortization of research and development expenses incurred in 2024, as required by the 2017 Tax Cuts and Jobs Act (Tax Act). The mandatory capitalization requirement increases our 2024 cash tax liabilities materially but also decreases our effective tax rate due to increasing the foreign-derived intangible income deduction. If the mandatory capitalization is deferred, our effective tax rate in 2024 could be higher when compared to current law and our cash tax liabilities could be lower.

Previous wording

Our principal sources of liquidity are our cash, cash equivalents, marketable securities, and cash generated from operations. Cash, cash equivalents, and marketable securities are comprised of cash on deposit with banks, time deposits, money market funds, U.S. government and agency securities, and investment grade corporate debt securities. As part of our cash management strategy, we concentrate cash deposits with large financial institutions and our investment holdings are in diversified highly rated securities. Cash, cash equivalents, and marketable securities were $58.08 billion as of June 30, 2024, a decrease of $7.32 billion from December 31, 2023. The decrease was mostly due to our capital returns of $23.85 billion for repurchases of our Class A common stock and dividend payments, $15.19 billion for capital expenditures, including principal payments on finance leases, and $6.37 billion of taxes paid related to net share settlement of employee restricted stock unit (RSU) awards. These decreases were offset by $38.62 billion of cash generated from operations.

Current wording

Our principal sources of liquidity are our cash, cash equivalents, marketable securities, and cash generated from operations. Cash, cash equivalents, and marketable securities are comprised of cash on deposit with banks, time deposits, money market funds, U.S. government and agency securities, and investment grade corporate debt securities. As part of our cash management strategy, we concentrate cash deposits with large financial institutions and our investment holdings are in diversified highly rated securities. Cash, cash equivalents, and marketable securities were $70.90 billion as of September 30, 2024, an increase of $5.50 billion from December 31, 2023. The increase was mostly due to $63.34 billion of cash generated from operations and $10.43 billion of net proceeds from the issuance of fixed-rate senior unsecured notes in August 2024. These increases were offset by our capital returns of $33.93 billion for repurchases of our Class A common stock and payments of dividends and dividend equivalents, $24.39 billion for capital expenditures, including principal payments on finance leases, and $9.91 billion of taxes paid related to net share settlement of employee restricted stock unit (RSU) awards.

Previous wording

Cash provided by operating activities during the six months ended June 30, 2024 mostly consisted of $25.83 billion net income adjusted for certain non-cash items, such as $8.18 billion of share-based compensation expense, and $7.01 billion of depreciation and amortization expense. The increase in cash flows from operating activities during the six months ended June 30, 2024, compared to the same period in 2023, was due to an increase in cash collection from our customers driven by the increase in revenue, partially offset by higher cash paid for income taxes and other operational spending.

Current wording

Cash provided by operating activities during the nine months ended September 30, 2024 mostly consisted of $41.52 billion net income adjusted for certain non-cash items, such as $12.43 billion of share-based compensation expense, and $11.04 billion of depreciation and amortization expense. The increase in cash flows from operating activities during the nine months ended September 30, 2024, compared to the same period in 2023, was due to an increase in cash collection from our customers driven by the increase in revenue, partially offset by higher cash paid for income taxes and other operational spending.

Previous wording

Cash used in investing activities during the six months ended June 30, 2024 mostly consisted of $14.57 billion of net purchases of property and equipment as we continued to invest in servers, data centers, and network infrastructure and $2.32 billion of net purchases of marketable debt securities. The increase in cash used in investing activities during the six months ended June 30, 2024, compared to the same period in 2023, was driven by increases in purchases of marketable debt securities and property and equipment.

Current wording

Cash used in investing activities during the nine months ended September 30, 2024 mostly consisted of $22.83 billion of net purchases of property and equipment as we continued to invest in servers, data centers, and network infrastructure and $2.67 billion of net purchases of marketable debt securities. The increase in cash used in investing activities during the nine months ended September 30, 2024, compared to the same period in 2023, was mostly due to increases in net purchases of marketable debt securities and property and equipment.

Previous wording

We anticipate making capital expenditures of approximately $37 billion to $40 billion in 2024. We currently expect our capital expenditures to grow significantly in 2025 as we invest to support our AI research and product development efforts.

Current wording

We anticipate making capital expenditures of approximately $38 billion to $40 billion in 2024 and continue to expect significant capital expenditures growth in 2025.

Previous wording

Cash used in financing activities during the six months ended June 30, 2024 mostly consisted of $21.31 billion for repurchases of our Class A common stock, $6.37 billion of taxes paid related to net share settlement of RSUs, and $2.54 billion of cash dividends paid for our common stock. The increase in cash used in financing activities during the six months ended June 30, 2024, compared to the same period in 2023, was driven by increases in repurchases of our Class A common stock, taxes paid related to net share settlement of RSUs, and quarterly dividend payments that began in March 2024. In addition, the increase was also driven by net proceeds from debt offerings which took place in May 2023.

Current wording

Cash used in financing activities during the nine months ended September 30, 2024 mostly consisted of $30.12 billion for repurchases of our Class A common stock, $9.91 billion of taxes paid related to net share settlement of RSUs, and $3.80 billion of payments of dividends and dividend equivalents, partially offset by $10.43 billion of net proceeds from the issuance of additional notes in August 2024. The increase in cash used in financing activities during the nine months ended September 30, 2024, compared to the same period in 2023, was mostly due to increases in our capital returns of $16.29 billion for repurchases of our Class A common stock and $3.80 billion for quarterly dividend payments that began in March 2024. In addition, the increase was also driven by higher taxes paid related to net share settlement of RSUs.

Previous wording

Our operating lease obligations mostly include offices, data centers and colocations. Our facilities consolidation restructuring efforts did not materially change our operating lease obligations. Our contractual commitments are primarily related to our investments in servers, network infrastructure, and consumer hardware products in Reality Labs.

Current wording

Our operating lease obligations mostly include data centers, offices and colocations. Our facilities consolidation restructuring efforts did not materially change our operating lease obligations. Our contractual commitments are mostly related to our investments in servers, network infrastructure, and consumer hardware products in Reality Labs.