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 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.

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 months ended March 31, 2025 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 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.

Current wording

Our financial results and key Family metrics for the first quarter of 2025 are set forth below. Total revenue for the first quarter of 2025 was $42.31 billion, an increase of 16% compared to the first quarter of 2024, due to an increase in advertising revenue. Revenue on a constant currency basis would have increased 19% compared to the first quarter of 2024. Ad impressions delivered across our Family of Apps in the first quarter of 2025 increased 5% year-over-year, and our average price per ad in the first quarter of 2025 increased 10% year-over-year.

Previous wording

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

Current wording

•Net income was $16.64 billion, with diluted earnings per share (EPS) of $6.43 for the three months ended March 31, 2025.

Previous wording

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

Current wording

•Capital expenditures, including principal payments on finance leases, were $13.69 billion for the three months ended March 31, 2025.

Previous 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.

Current wording

•Share repurchases of our Class A common stock were $13.40 billion and total dividend and dividend equivalent payments were $1.33 billion for the three months ended March 31, 2025.

Previous wording

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

Current wording

•Cash, cash equivalents, and marketable securities were $70.23 billion as of March 31, 2025.

Previous wording

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

Current wording

•Family daily active people (DAP) was 3.43 billion on average for March 2025, an increase of 6% year-over-year.

Previous wording

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

Current wording

•Ad impressions delivered across our Family of Apps in the first quarter of 2025 increased by 5% year-over-year.

Previous wording

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

Current wording

•Average price per ad in the first quarter of 2025 increased by 10% 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,

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 an increasing number of laws have been introduced limiting or prohibiting the provision of our services to younger users. 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 and may negatively impact our advertising revenue and user engagement. 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 European Union, European Economic Area, and Switzerland from "legitimate interests" to "consent," and began offering users in the region a "subscription for no ads" alternative. We subsequently began offering users in the region who elect to continue using our services free-of-charge, supported by ads, an option to see less personalized ads, which are less relevant and effective than our premium ad offerings. 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.

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, 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.

Current wording

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. However, we continue to face competition from other products and services within certain demographics, in particular younger users. In addition, 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 due to geopolitical conditions, which have adversely affected our user growth and engagement. These trends have adversely affected our advertising revenue and we expect will continue to adversely 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 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.

Current wording

We remain focused on operating efficiently while investing in significant opportunities. In the three months ended March 31, 2025, 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.

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 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.

Current wording

We are also making significant investments in our metaverse and wearables efforts, including developing virtual, augmented, and mixed reality devices, software for social platforms, neural interfaces, and other foundational technologies. 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 that may only be fully realized in the next decade. During the three months ended March 31, 2025, our RL segment reduced our overall operating profit by approximately $4.21 billion, and we continue to expect our full-year RL operating losses to increase in 2025. We expect this will be a complex, evolving, and long-term initiative, and our ability to support our RL efforts is dependent on generating sufficient profits from other areas of our business. We are investing now because we believe this will become the next computing platform 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 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.

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 mainly in geographies that monetize at lower rates, such as Asia-Pacific. In the first quarter of 2025, revenue increased by 18% in United States & Canada, 14% in Europe, 13% in Asia-Pacific, and 20% in Rest of World, in each case relative to the same period in 2024.

Previous wording

Note: Non-advertising revenue includes RL revenue generated from the delivery of consumer hardware products and FoA Other revenue, which consists of revenue from WhatsApp Business Platform, net fees we receive from developers using our Payments infrastructure, and revenue from various other sources.

Current wording

Note: Non-advertising revenue includes RL revenue generated from the delivery of consumer hardware products and FoA Other revenue, which consists of revenue from WhatsApp Business Platform, Meta Verified subscriptions, net fees we receive from developers using our Payments infrastructure, and revenue from various other sources.

Previous wording

Note: We report the numbers of DAP as specific amounts, but these numbers are estimates of the numbers of unique people using our products and are subject to statistical variances and errors. While we expect the error margin for these estimates to vary from period to period, we estimate that such margin generally will be approximately 3% of our worldwide DAP. At our scale, it is very difficult to attribute multiple user accounts within and across products to individual people, and it is possible that the actual numbers of unique people using our products may vary significantly from our estimates, potentially beyond our estimated error margins. For additional information, see the section entitled "Limitations of Key Metrics and Other Data" in this Quarterly Report on Form 10-Q. In the third quarter of 2022, we updated our Family metrics calculations to maintain calibration of our models against recent user survey data, and we estimate such update contributed an aggregate of approximately 30 million DAP to our reported worldwide DAP in September 2022. Beginning in the fourth quarter of 2023, our Family metrics no longer include Messenger Kids users.

Current wording

Note: We report the numbers of DAP as specific amounts, but these numbers are estimates of the numbers of unique people using our products and are subject to statistical variances and errors. While we expect the error margin for these estimates to vary from period to period, we estimate that such margin generally will be approximately 3% of our worldwide DAP. At our scale, it is very difficult to attribute multiple user accounts within and across products to individual people, and it is possible that the actual numbers of unique people using our products may vary significantly from our estimates, potentially beyond our estimated error margins. For additional information, see the section entitled "Limitations of Key Metrics and Other Data" in this Quarterly Report on Form 10-Q. Beginning in the fourth quarter of 2023, our Family metrics no longer include Messenger Kids users.

Previous wording

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

Current wording

Worldwide DAP increased 6% to 3.43 billion on average during March 2025 from 3.24 billion during March 2024.

Previous wording

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

Current wording

During the first quarter of 2025, worldwide ARPP was $12.36, an increase of 10% from the first quarter of 2024.

Previous wording

Other revenue. Other revenue consists of revenue from WhatsApp Business Platform, net fees we receive from developers using our Payments infrastructure and revenue from various other sources.

Current wording

Other revenue. Other revenue consists of revenue from WhatsApp Business Platform, Meta Verified subscriptions, net fees we receive from developers using our Payments infrastructure, and revenue from various other sources.

Previous 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.

Current wording

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

Previous wording

Cost of revenue. Our cost of revenue consists of expenses associated with the delivery and distribution of our products. These mainly include expenses related to the operation of our data centers and technical infrastructure, such as depreciation expense from servers, network infrastructure and buildings, as well as payroll and related expenses which include share-based compensation for employees on our operations teams, and energy and bandwidth costs. Cost of revenue also includes costs associated with partner arrangements, including traffic acquisition costs and credit card and other fees related to processing customer transactions; RL inventory costs, which consist of cost of products sold and estimated losses on non-cancelable contractual commitments; and content costs.

Current wording

Cost of revenue. Our cost of revenue consists of expenses associated with the delivery and distribution of our products. These mainly include expenses related to the operation of our data centers and technical infrastructure, such as depreciation expense from servers, network infrastructure and buildings, employee compensation which includes payroll, share-based compensation and benefits for employees on our operations teams, and energy and bandwidth costs. Cost of revenue also consists of costs associated with partner arrangements, including traffic acquisition costs and credit card and other fees related to processing customer transactions; RL inventory costs, which consist of cost of products sold and estimated losses on non-cancelable contractual commitments; and content costs.

Previous wording

Research and development. Research and development expenses consist mostly of payroll and related expenses which include share-based compensation; RL technology development costs; facilities-related costs for employees on our engineering and technical teams who are responsible for developing new technologies and products as well as improving existing products; infrastructure costs; and restructuring charges.

Current wording

Research and development. Research and development expenses consist mostly of employee compensation which includes payroll, share-based compensation and benefits for our employees on our engineering and technical teams who are responsible for developing new technologies and products; RL technology development costs; infrastructure costs; and facilities-related costs.

Previous wording

Marketing and sales. Marketing and sales expenses consist mainly of marketing and promotional expenses as well as payroll and related expenses which include share-based compensation for our employees engaged in sales, sales support, marketing, business development, and customer service functions. Our marketing and sales expenses also include professional services such as content reviewers to support our community and product operations; and restructuring charges.

Current wording

Marketing and sales. Marketing and sales expenses consist primarily of employee compensation which includes payroll, share-based compensation and benefits for our employees engaged in sales, sales support, marketing, business development, and customer service functions; marketing and promotional expenses; and professional services to support our community and product operations.

Previous wording

General and administrative. General and administrative expenses consist primarily of legal-related costs, which include estimated fines, settlements, or other losses in connection with legal and related matters, as well as other legal fees; payroll and related expenses which include share-based compensation for certain of our executives as well as our legal, finance, human resources, corporate communications and policy, and other administrative employees; other taxes, such as digital services taxes and other non-income-based tax levies; professional services; and restructuring charges.

Current wording

General and administrative. General and administrative expenses consist primarily of employee compensation which includes payroll, share-based compensation and benefits for certain of our executives as well as our legal, finance, human resources, corporate communications and policy, and other administrative employees; legal-related costs, which include estimated fines, settlements, or other losses in connection with legal and related matters, as well as other legal fees; other taxes, such as digital services taxes and other non-income-based tax levies; and professional services.

Previous 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.

Current wording

FoA revenue in the three months ended March 31, 2025 increased $5.89 billion, or 16%, compared to the same period in 2024. The increase was almost entirely driven by advertising revenue.

Previous 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.

Current wording

Advertising revenue in the three months ended March 31, 2025 increased $5.76 billion, or 16%, compared to the same period in 2024, due to increases in ad impressions delivered and average price per ad. During the three months ended March 31, 2025, ad impressions delivered increased by 5%, year-over-year, as compared with a 20% increase in the same period in 2024. Ad impressions delivered during the three months ended March 31, 2025 grew in all regions, especially in Asia-Pacific, which was primarily driven by increases in users and their engagement on our products. During the three months ended March 31, 2025, the average price per ad increased by 10%, year-over-year, as compared with an increase of 6% in the same period in 2024. The increase in average price per ad during the three months ended March 31, 2025 was driven by an increase in advertising demand, which we believe is mostly due to ongoing improvements to our ad performance from our ad targeting and measurement tools. This increase was 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 First Quarter Results." In addition, the online commerce vertical was the largest contributor to the increase in advertising revenue in the three months ended March 31, 2025 compared to the same period in 2024. We anticipate that future advertising revenue will be driven by a combination of price and ad impressions delivered.

Previous 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.

Current wording

Changes in foreign exchange rates had an unfavorable impact on our revenue in the three months ended March 31, 2025 compared to the same period in 2024. 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 March 31, 2025, our total revenue and advertising revenue would have been $43.55 billion and $42.62 billion, which were $1.24 billion and $1.22 billion higher than actual total revenue and advertising revenue, respectively.

Previous 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.

Current wording

Research and development expenses in the three months ended March 31, 2025 increased $2.17 billion, or 22%, compared to the same period in 2024. The increase was mostly due to higher employee compensation and infrastructure costs for research and development.

Previous 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.

Current wording

The higher employee compensation was mainly from a 14% growth in employee headcount from March 31, 2024 to March 31, 2025 in engineering and other technical functions supporting our continued investment in our family of products and Reality Labs.

Previous 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.

Current wording

General and administrative expenses in the three months ended March 31, 2025 decreased $1.18 billion, or 34%, compared to the same period in 2024. The decrease was primarily driven by lower legal-related costs.

Previous wording

See Note 3 — Restructuring and Note 12 — Commitments and Contingencies in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q for additional information regarding restructuring charges and legal-related costs, respectively.

Current wording

See Note 8 — Commitments and Contingencies in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q for additional information regarding legal-related costs.

Previous 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.

Current wording

FoA income from operations in the three months ended March 31, 2025 increased $4.10 billion, or 23%, compared to the same period in 2024. The increase in FoA income from operations was driven by higher advertising revenue which was partially offset by an increase in costs and expenses. The increase in costs and expenses was mainly due to increases in employee compensation and infrastructure costs, partially offset by a decrease in legal-related costs.

Previous 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.

Current wording

RL loss from operations in the three months ended March 31, 2025 increased $364 million, or 9%, compared to the same period in 2024, driven by an increase in RL costs and expenses. RL costs and expenses increased primarily due to an increase in employee compensation.

Previous wording

Our provision for income taxes in the three months ended September 30, 2024 decreased $303 million, or 12%, compared to the same period in 2023, due to a decrease in the effective tax rate, partially offset by an increase in income before provision for income taxes. Our provision for income taxes in the nine months ended September 30, 2024 increased $49 million, or 1%, compared to the same period in 2023, due to an increase in income before provision for income taxes, offset by a decrease in the effective tax rate.

Current wording

Our provision for income taxes in the three months ended March 31, 2025 decreased $76 million, or 4%, compared to the same period in 2024, due to a decrease in the effective tax rate, offset by an increase in income before provision for income taxes.

Previous 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.

Current wording

Our effective tax rate decreased in the three months ended March 31, 2025 compared to the same period in 2024, a majority of which was due to excess tax benefits recognized from share-based compensation.

Previous wording

Effective Tax Rate Items. Our effective tax rate in the future will depend upon the proportion between the following items and income before provision for income taxes: U.S. tax benefits from foreign-derived intangible income, tax effects from share-based compensation, research tax credit, tax effects from capital losses not expected to be utilized, restructurings, settlement of tax contingency items, tax effects of changes in our business, and the effects of changes in tax law.

Current wording

Effective Tax Rate Items. Our effective tax rate in the future will depend upon the proportion between the following items and income before provision for income taxes: U.S. tax benefits from foreign-derived intangible income, tax effects from share-based compensation, research tax credit, tax effects from capital losses not expected to be utilized, settlement of tax contingency items, tax effects of changes in our business, and the effects of changes in tax law.

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 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.

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 April 25, 2025 price, and absent any changes to our tax landscape, we expect our effective tax rate for the full year 2025 to be in the range of 12-15%. This includes the effects of the mandatory capitalization and amortization of research and development expenses incurred in 2025, as required by the 2017 Tax Cuts and Jobs Act (Tax Act). The mandatory capitalization requirement increases our 2025 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 or repealed, our effective tax rate in 2025 could be higher when compared to current law and our cash tax liabilities could be lower.

Previous wording

A number of countries have begun to enact legislation to implement the Organization for Economic Cooperation and Development’s 15% global minimum tax regime with effect from January 1, 2024. We do not expect these changes to have a material impact on our consolidated financial statements for 2024. We continue to evaluate the impacts of proposed and enacted legislation with respect to the global minimum tax regime in the jurisdictions we operate in. Our effective tax rate and cash tax payments could increase in future years as further jurisdictions enact legislation.

Current wording

A number of countries have enacted legislation to implement the Organization for Economic Cooperation and Development’s 15% global minimum tax regime. We do not expect these changes to have a material impact on our consolidated financial statements for 2025. We continue to evaluate the impacts of proposed and enacted legislation with respect to the global minimum tax regime in the jurisdictions we operate in. As additional jurisdictions enact legislation, transitional relief expires, and other provisions of the minimum tax legislation become effective, our effective tax rate and cash tax payments could increase in future years.

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 $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.

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, investment grade corporate debt securities, and marketable equity 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 $70.23 billion as of March 31, 2025, a decrease of $7.58 billion from December 31, 2024. The decrease was primarily due to our capital returns of $14.08 billion for repurchases of our Class A common stock and payments of dividends and dividend equivalents, $13.69 billion for capital expenditures, including principal payments on finance leases, and $4.88 billion of taxes paid related to net share settlement of employee restricted stock unit (RSU) awards. These decreases were partially offset by $24.03 billion of cash generated from operations.

Previous 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.

Current wording

Cash provided by operating activities during the three months ended March 31, 2025 mostly consisted of $16.64 billion net income adjusted for certain non-cash items, such as $4.15 billion of share-based compensation expense and $3.90 billion of depreciation and amortization expense. The increase in cash flows from operating activities during the three months ended March 31, 2025, compared to the same period in 2024, was due to an increase in cash collection from our customers driven by the increase in revenue, partially offset by higher operational spending.