FACEBOOK INC, 10-Q filed on 11/3/2016
Quarterly Report
Document and Entity Information
9 Months Ended
Sep. 30, 2016
Oct. 28, 2016
Class A Common Stock
Oct. 28, 2016
Class B Common Stock
Entity Information
 
 
 
Document Type
10-Q 
 
 
Amendment Flag
false 
 
 
Document Period End Date
Sep. 30, 2016 
 
 
Document Fiscal Year Focus
2016 
 
 
Document Fiscal Period Focus
Q3 
 
 
Trading Symbol
FB 
 
 
Entity Registrant Name
FACEBOOK INC 
 
 
Entity Central Index Key
0001326801 
 
 
Current Fiscal Year End Date
--12-31 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
Entity Common Stock, Shares Outstanding
 
2,340,824,544 
541,342,934 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Current assets:
 
 
Cash and cash equivalents
$ 6,038 
$ 4,907 
Marketable securities
20,102 
13,527 
Accounts receivable, net of allowances for doubtful accounts of $83 and $68 as of September 30, 2016 and December 31, 2015, respectively
3,070 
2,559 
Prepaid expenses and other current assets
1,118 
659 
Total current assets
30,328 
21,652 
Property and equipment, net
7,899 
5,687 
Intangible assets, net
2,702 
3,246 
Goodwill
18,085 
18,026 
Other assets
660 
796 
Total assets
59,674 
49,407 
Current liabilities:
 
 
Accounts payable
260 
196 
Partners payable
239 
217 
Accrued expenses and other current liabilities
2,018 
1,449 
Deferred revenue and deposits
78 
56 
Current portion of capital lease obligations
0 
7 
Total current liabilities
2,595 
1,925 
Capital lease obligations, less current portion
0 
107 
Other liabilities
2,964 
3,157 
Total liabilities
5,559 
5,189 
Stockholders' equity:
 
 
Common stock, $0.000006 par value; 5,000 million Class A shares authorized, 2,336 million and 2,293 million shares issued and outstanding, including 5 million and 8 million outstanding shares subject to repurchase, as of September 30, 2016 and December 31, 2015, respectively; 4,141 million Class B shares authorized, 546 million and 552 million shares issued and outstanding, including 2 million and 3 million outstanding shares subject to repurchase, as of September 30, 2016 and December 31, 2015, respectiv
0 
0 
Additional paid-in capital
38,756 
34,886 
Accumulated other comprehensive loss
(372)
(455)
Retained earnings
15,731 
9,787 
Total stockholders' equity
54,115 
44,218 
Total liabilities and stockholders' equity
$ 59,674 
$ 49,407 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Current assets:
 
 
Accounts receivable, allowances for doubtful accounts
$ 83 
$ 68 
Stockholders' equity:
 
 
Common stock, par value (in dollars per share)
$ 0.000006 
$ 0.000006 
Class A Common Stock
 
 
Stockholders' equity:
 
 
Common stock, shares authorized
5,000,000,000 
5,000,000,000 
Common stock, shares issued
2,336,000,000 
2,293,000,000 
Common stock, shares outstanding
2,336,000,000 
2,293,000,000 
Common stock, outstanding shares subject to repurchase
5,000,000 
8,000,000 
Class B Common Stock
 
 
Stockholders' equity:
 
 
Common stock, shares authorized
4,141,000,000 
4,141,000,000 
Common stock, shares issued
546,000,000 
552,000,000 
Common stock, shares outstanding
546,000,000 
552,000,000 
Common stock, outstanding shares subject to repurchase
2,000,000 
3,000,000 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Revenue
$ 7,011 
$ 4,501 
$ 18,829 
$ 12,087 
Costs and expenses:
 
 
 
 
Cost of revenue
987 
720 
2,741 
2,043 
Research and development
1,539 
1,271 
4,345 
3,502 
Marketing and sales
925 
706 
2,651 
1,953 
General and administrative
438 
345 
1,216 
924 
Total costs and expenses
3,889 
3,042 
10,953 
8,422 
Income from operations
3,122 
1,459 
7,876 
3,665 
Interest and other income/(expense), net
47 
(27)
125 
(28)
Income before provision for income taxes
3,169 
1,432 
8,001 
3,637 
Provision for income taxes
790 
536 
2,057 
1,510 
Net income
2,379 
896 
5,944 
2,127 
Less: Net income attributable to participating securities
6 
5 
18 
12 
Net income attributable to Class A and Class B common stockholders
2,373 
891 
5,926 
2,115 
Earnings per share attributable to Class A and Class B common stockholders:
 
 
 
 
Basic (in dollars per share)
$ 0.83 
$ 0.32 
$ 2.07 
$ 0.76 
Diluted (in dollars per share)
$ 0.82 
$ 0.31 
$ 2.05 
$ 0.75 
Weighted average shares used to compute earnings per share attributable to Class A and Class B common stockholders:
 
 
 
 
Basic (in shares)
2,871 
2,808 
2,857 
2,796 
Diluted (in shares)
2,915 
2,863 
2,902 
2,848 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
819 
757 
2,371 
2,223 
Cost of revenue
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
30 
21 
80 
59 
Research and development
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
633 
598 
1,842 
1,767 
Marketing and sales
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
94 
82 
269 
236 
General and administrative
 
 
 
 
Share-based compensation expense included in costs and expenses:
 
 
 
 
Share-based compensation expense
$ 62 
$ 56 
$ 180 
$ 161 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Statement of Comprehensive Income [Abstract]
 
 
 
 
Net income
$ 2,379 
$ 896 
$ 5,944 
$ 2,127 
Other comprehensive income (loss):
 
 
 
 
Change in foreign currency translation adjustment, net of tax
35 
(22)
55 
(155)
Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment and Other, Net of Tax
(33)
(1)
28 
3 
Comprehensive income
$ 2,381 
$ 873 
$ 6,027 
$ 1,975 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Cash flows from operating activities
 
 
Net income
$ 5,944 
$ 2,127 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
1,728 
1,402 
Share-based compensation
2,371 
2,214 
Deferred income taxes
(123)
(672)
Tax benefit from share-based award activity
1,420 
1,155 
Excess tax benefit from share-based award activity
(1,420)
(1,155)
Other
23 
13 
Changes in assets and liabilities:
 
 
Accounts receivable
(478)
(405)
Prepaid expenses and other current assets
(311)
(145)
Other assets
46 
4 
Accounts payable
(21)
7 
Partners payable
20 
40 
Accrued expenses and other current liabilities
641 
291 
Deferred revenue and deposits
21 
(18)
Other liabilities
(103)
914 
Net cash provided by operating activities
9,758 
5,772 
Cash flows from investing activities
 
 
Purchases of property and equipment
(3,222)
(1,831)
Purchases of marketable securities
(17,368)
(10,333)
Sales of marketable securities
9,791 
4,125 
Maturities of marketable securities
1,034 
1,563 
Acquisitions of businesses, net of cash acquired, and purchases of intangible assets
(81)
(309)
Change in restricted cash and deposits
82 
77 
Net cash used in investing activities
(9,764)
(6,708)
Cash flows from financing activities
 
 
Principal payments on capital lease and other financing obligations
(312)
(107)
Excess tax benefit from share-based award activity
1,420 
1,155 
Other financing activities, net
(2)
(20)
Net cash provided by financing activities
1,106 
1,028 
Effect of exchange rate changes on cash and cash equivalents
31 
(99)
Net increase (decrease) in cash and cash equivalents
1,131 
(7)
Cash and cash equivalents at beginning of period
4,907 
4,315 
Cash and cash equivalents at end of period
6,038 
4,308 
Cash paid during the period for:
 
 
Interest
11 
8 
Income taxes, net
764 
199 
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
319 
107 
Promissory note payable issued in connection with an acquisition
0 
198 
Settlement of contingent consideration liability
$ 33 
$ 0 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
The condensed consolidated balance sheet as of December 31, 2015 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.
The condensed consolidated financial statements include the accounts of Facebook, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
The accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2016.
There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 that have had a material impact on our condensed consolidated financial statements and related notes.
Use of Estimates
Conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, collectability of accounts receivable, contingent liabilities, fair value of financial instruments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, and income taxes. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.
Recently Issued or Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. This guidance will be effective for us in the first quarter of 2019 on a modified retrospective basis and early adoption is permitted. We are still evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.
In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. This guidance will be effective for us in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. We are still evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.
In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting (ASU 2016-09) to simplify the accounting for share-based payment transactions, including the income tax consequences, an option to recognize gross share-based compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This guidance will be effective for us in the first quarter of 2017, and early adoption is permitted. We are still evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures; however, we anticipate the impact will reduce our effective tax rate.
In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230) (ASU 2016-15), which addresses eight specific cash flow classification issues to reduce diversity in practice. This guidance will be effective for us in the first quarter of 2017 on a retrospective basis and early adoption is permitted. We elected to early adopt this guidance in the third quarter of 2016 on a retrospective basis. There was no reclassification impact of the adoption on our condensed consolidated statement of cash flows for the nine months ended September 30, 2016 and 2015, and such statements have been presented in accordance with this new guidance.
Earnings per Share
Earnings per Share
Earnings per Share
We compute earnings per share (EPS) of Class A and Class B common stock using the two-class method required for participating securities. We consider restricted stock awards to be participating securities because holders of such shares have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares.
Undistributed earnings allocated to participating securities are subtracted from net income in determining net income attributable to common stockholders. Basic EPS is computed by dividing net income attributable to common stockholders by the weighted-average number of shares of our Class A and Class B common stock outstanding, adjusted for outstanding shares that are subject to repurchase.
For the calculation of diluted EPS, net income attributable to common stockholders for basic EPS is adjusted by the effect of dilutive securities, such as awards under our equity compensation plans and inducement awards under separate non-plan restricted stock unit (RSU) award agreements. In addition, the computation of the diluted EPS of Class A common stock assumes the conversion of our Class B common stock to Class A common stock, while the diluted EPS of Class B common stock does not assume the conversion of those shares to Class A common stock. Diluted EPS attributable to common stockholders is computed by dividing the resulting net income attributable to common stockholders by the weighted-average number of fully diluted common shares outstanding.
Basic and dilutive securities in our basic and diluted EPS calculation for the three and nine months ended September 30, 2016 also included the effect of earn-out shares which issuance was contingent upon the completion of certain milestones. The performance milestones related to our earn-out shares were completed in the second quarter of 2016. Basic and dilutive securities in our basic and diluted EPS calculation for the three and nine months ended September 30, 2015 excluded the effect of these earn-out shares because the milestones were not met as of September 30, 2015.
Certain RSUs were excluded from the EPS calculation because the impact would be anti-dilutive. These excluded RSUs were not material for the three and nine months ended September 30, 2016 and 2015.
Basic and diluted EPS are the same for each class of common stock because they are entitled to the same liquidation and dividend rights.
The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts): 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
1,925

 
$
454

 
$
719

 
$
177

 
$
4,806

 
$
1,138

 
$
1,705

 
$
422

Less: Net income attributable to participating securities
5

 
1

 
4

 
1

 
15

 
3

 
9

 
3

Net income attributable to common stockholders
$
1,920

 
$
453

 
$
715

 
$
176

 
$
4,791

 
$
1,135

 
$
1,696

 
$
419

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
2,328

 
550

 
2,264

 
558

 
2,316

 
549

 
2,253

 
559

Less: Shares subject to repurchase
5

 
2

 
10

 
4

 
6

 
2

 
11

 
5

Number of shares used for basic EPS computation
2,323

 
548

 
2,254

 
554

 
2,310

 
547

 
2,242

 
554

Basic EPS
$
0.83

 
$
0.83

 
$
0.32

 
$
0.32

 
$
2.07

 
$
2.07

 
$
0.76

 
$
0.76

Diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
$
1,920

 
$
453

 
$
715

 
$
176

 
$
4,791

 
$
1,135

 
$
1,696

 
$
419

Reallocation of net income attributable to participating securities
6

 
—

 
5

 
—

 
18

 
—

 
12

 
—

Reallocation of net income as a result of conversion of Class B to Class A common stock
453

 
—

 
176

 
—

 
1,135

 
—

 
419

 
—

Reallocation of net income to Class B common stock
—

 
2

 
—

 
3

 
—

 
9

 
—

 
10

Net income attributable to common stockholders for diluted EPS
$
2,379

 
$
455

 
$
896

 
$
179

 
$
5,944

 
$
1,144

 
$
2,127

 
$
429

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares used for basic EPS computation
2,323

 
548

 
2,254

 
554

 
2,310

 
547

 
2,242

 
554

Conversion of Class B to Class A common stock
548

 
—

 
554

 
—

 
547

 
—

 
554

 
—

Weighted average effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee stock options
4

 
4

 
7

 
7

 
5

 
5

 
8

 
8

RSUs
35

 
3

 
42

 
8

 
34

 
5

 
39

 
10

Shares subject to repurchase
4

 
1

 
6

 
2

 
5

 
1

 
5

 
2

Earn-out shares
1

 
1

 
—

 
—

 
1

 
1

 
—

 
—

Number of shares used for diluted EPS computation
2,915

 
557

 
2,863

 
571

 
2,902

 
559

 
2,848

 
574

Diluted EPS
$
0.82

 
$
0.82

 
$
0.31

 
$
0.31

 
$
2.05

 
$
2.05

 
$
0.75

 
$
0.75

Cash and Cash Equivalents, and Marketable Securities
Cash and Cash Equivalents, and Marketable Securities
Cash and Cash Equivalents, and Marketable Securities
The following table sets forth the cash and cash equivalents, and marketable securities (in millions):
 
September 30, 2016
 
December 31, 2015
Cash and cash equivalents:
 
 
 
Cash
$
1,953

 
$
1,703

Money market funds
2,347

 
2,409

U.S. government securities
900

 
597

U.S. government agency securities
705

 
145

Corporate debt securities
133

 
53

Total cash and cash equivalents
6,038

 
4,907

Marketable securities:
 
 
 
U.S. government securities
7,416

 
5,948

U.S. government agency securities
6,738

 
4,475

Corporate debt securities
5,948

 
3,104

Total marketable securities
20,102

 
13,527

Total cash and cash equivalents, and marketable securities
$
26,140

 
$
18,434


The gross unrealized gains or losses on our marketable securities as of September 30, 2016 and December 31, 2015 were not significant. In addition, the gross unrealized losses that had been in a continuous loss position for 12 months or longer were not significant as of September 30, 2016 and December 31, 2015. As of September 30, 2016, we considered the decreases in market value on our marketable securities to be temporary in nature and did not consider any of our investments to be other-than-temporarily impaired.
The following table classifies our marketable securities by contractual maturities (in millions):
 
September 30, 2016
Due in one year
$
4,898

Due in one to five years
15,204

Total
$
20,102

Fair Value Measurement
Fair Value Measurement
Fair Value Measurement
The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy (in millions): 
 
 
 
 
Fair Value Measurement at
Reporting Date Using
Description
 
September 30, 2016
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
 
Money market funds
 
$
2,347

 
$
2,347

 
$
—

 
$
—

U.S. government securities
 
900

 
900

 
—

 
—

U.S. government agency securities
 
705

 
705

 
—

 
—

Corporate debt securities
 
133

 
—

 
133

 
—

Marketable securities:
 
 
 
 
 
 
 
 
U.S. government securities
 
7,416

 
7,416

 
—

 
—

U.S. government agency securities
 
6,738

 
6,738

 
—

 
—

Corporate debt securities
 
5,948

 
—

 
5,948

 
—

Total cash equivalents and marketable securities
 
$
24,187

 
$
18,106

 
$
6,081

 
$
—

 
 
 
 
 
 
 
 
 
Accrued expenses and other current liabilities:
 
 
 
 
 
 
 
 
Contingent consideration liability
 
$
263

 
$
—

 
$
263

 
$
—

 
 
 
 
Fair Value Measurement at
Reporting Date Using
Description
 
December 31, 2015
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
 
Money market funds
 
$
2,409

 
$
2,409

 
$
—

 
$
—

U.S. government securities
 
597

 
597

 
—

 
—

U.S. government agency securities
 
145

 
145

 
—

 
—

Corporate debt securities
 
53

 
—

 
53

 
—

Marketable securities:
 
 
 
 
 
 
 
 
U.S. government securities
 
5,948

 
5,948

 
—

 
—

U.S. government agency securities
 
4,475

 
4,475

 
—

 
—

Corporate debt securities
 
3,104

 
—

 
3,104

 
—

Total cash equivalents and marketable securities
 
$
16,731

 
$
13,574

 
$
3,157

 
$
—

 
 
 
 
 
 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
 
Contingent consideration liability
 
$
260

 
$
—

 
$
—

 
$
260


We classify our cash equivalents and marketable securities within Level 1 or Level 2 because we use quoted market prices or alternative pricing sources and models utilizing market observable inputs to determine their fair value.
The performance milestones related to our contingent consideration liability were completed in the second quarter of 2016. Therefore, we no longer have to estimate the fair value of our contingent consideration liability based on the present value of probability-weighted future cash flows which are unobservable inputs that are not supported by market activity. As such, we reclassified our contingent consideration liability from Level 3 to Level 2.
During the three and nine months ended September 30, 2016, we recognized an increase in the fair value of our contingent liability of $20 million and $87 million, respectively, in research and development expense in our condensed consolidated statements of income, mostly due to the increase in the fair value of our common stock and the completion of the performance milestones described above. In addition, we settled a portion of the contingent liability in July 2016 and the remaining portion of the contingent liability was reclassified to accrued expenses and other current liabilities on our condensed consolidated balance sheets as of September 30, 2016.
Property and Equipment
Property and Equipment
Property and Equipment
Property and equipment consists of the following (in millions): 
 
September 30,
2016
 
December 31,
2015
Land
$
692

 
$
596

Buildings
2,687

 
2,273

Leasehold improvements
474

 
447

Network equipment
4,734

 
3,633

Computer software, office equipment and other
351

 
248

Construction in progress
1,840

 
622

Total
10,778

 
7,819

Less: Accumulated depreciation
(2,879
)
 
(2,132
)
Property and equipment, net
$
7,899

 
$
5,687


Construction in progress includes costs primarily related to construction of data centers, network equipment infrastructure to support our data centers around the world, and office buildings. No interest was capitalized during the three and nine months ended September 30, 2016 and 2015.
Goodwill and Intangible Assets
Goodwill and Intangible Assets
Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the nine months ended September 30, 2016 are as follows (in millions): 
Balance as of December 31, 2015
$
18,026

Goodwill acquired
56

Effect of currency translation adjustment
3

Balance as of September 30, 2016
$
18,085

Intangible assets consist of the following (in millions):
 
 
 
September 30, 2016
 
December 31, 2015
 
Weighted-Average Remaining Useful Lives (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired users
5.0
 
$
2,056

 
$
(604
)
 
$
1,452

 
$
2,056

 
$
(382
)
 
$
1,674

Acquired technology
3.8
 
915

 
(462
)
 
453

 
831

 
(310
)
 
521

Acquired patents
6.1
 
785

 
(399
)
 
386

 
785

 
(333
)
 
452

Trade names
3.4
 
629

 
(265
)
 
364

 
629

 
(163
)
 
466

Other
3.5
 
162

 
(115
)
 
47

 
162

 
(89
)
 
73

Total finite-lived intangible assets
4.7
 
$
4,547

 
$
(1,845
)
 
$
2,702

 
$
4,463

 
$
(1,277
)
 
$
3,186

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
In-process research and development (IPR&D)
 
 
$
—

 
$
—

 
$
—

 
$
60

 
$
—

 
$
60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intangible assets
 
 
$
4,547

 
$
(1,845
)
 
$
2,702

 
$
4,523

 
$
(1,277
)
 
$
3,246



We completed the IPR&D and reclassified it from indefinite-lived intangible asset to acquired technology in March 2016. We also began amortizing the balance over its estimated useful life.
Amortization expense of intangible assets was $195 million and $568 million for the three and nine months ended September 30, 2016, respectively, and $180 million and $539 million for the three and nine months ended September 30, 2015, respectively.
As of September 30, 2016, expected amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):
The remainder of 2016
$
182

2017
681

2018
614

2019
522

2020
357

Thereafter
346

Total
$
2,702

Long-term Debt
Long-term Debt
Long-term Debt
In May 2016, we terminated our undrawn five-year senior unsecured revolving credit facility that allowed us to borrow up to $6.5 billion and entered into a $2.0 billion senior unsecured revolving credit facility (2016 Facility). Any amounts outstanding under the 2016 Facility will be due and payable on May 20, 2021. As of September 30, 2016, no amounts had been drawn down and we were in compliance with the covenants under the 2016 Facility.
Commitments and Contingencies
Commitments and Contingencies
Commitments and Contingencies
Commitments
Leases
We have entered into various non-cancelable operating lease agreements for certain of our offices, land, and data centers with original lease periods expiring between 2016 and 2032. We are committed to pay a portion of the related actual operating expenses under certain of these lease agreements. Certain of these arrangements have free rent periods or escalating rent payment provisions, and we recognize rent expense under such arrangements on a straight-line basis. Operating lease expense was $63 million and $181 million for the three and nine months ended September 30, 2016, respectively, and $47 million and $127 million for the three and nine months ended September 30, 2015, respectively. As of September 30, 2016, we had fully repaid all of our capital lease obligations.
Contingencies
Legal Matters
Beginning on May 22, 2012, multiple putative class actions, derivative actions, and individual actions were filed in state and federal courts in the United States and in other jurisdictions against us, our directors, and/or certain of our officers alleging violation of securities laws or breach of fiduciary duties in connection with our initial public offering (IPO) and seeking unspecified damages. We believe these lawsuits are without merit, and we intend to continue to vigorously defend them. The vast majority of the cases in the United States, along with multiple cases filed against The NASDAQ OMX Group, Inc. and The Nasdaq Stock Market LLC (collectively referred to herein as NASDAQ) alleging technical and other trading-related errors by NASDAQ in connection with our IPO, were ordered centralized for coordinated or consolidated pre-trial proceedings in the U.S. District Court for the Southern District of New York. In a series of rulings in 2013 and 2014, the court denied our motion to dismiss the consolidated securities class action and granted our motions to dismiss the derivative actions against our directors and certain of our officers. On July 24, 2015, the court of appeals affirmed the dismissal of the derivative actions. On December 11, 2015, the court granted plaintiffs' motion for class certification in the consolidated securities action. In addition, the events surrounding our IPO became the subject of various state and federal government inquiries. In May 2014, the Securities and Exchange Commission (SEC) notified us that it had terminated its inquiry and that no enforcement action had been recommended by the SEC.
On April 27, 2016, we announced a proposal to create a new class of non-voting capital stock (Class C capital stock) and our intention to declare and pay a dividend of two shares of Class C capital stock for each outstanding share of Class A and Class B common stock (the Reclassification). Following our announcement of the Reclassification, beginning on April 29, 2016, multiple purported class action lawsuits were filed on behalf of our stockholders in the Delaware Court of Chancery against us, certain of our board of directors, and Mark Zuckerberg. The lawsuits have been consolidated under the caption In re Facebook, Inc. Class C Reclassification Litig., C.A. No. 12286-VCL, and the consolidated complaint generally alleges that the defendants breached their fiduciary duties in connection with the Reclassification. Among other remedies, these lawsuits seek to enjoin the Reclassification as well as unspecified money damages, costs, and attorneys’ fees. We believe that the lawsuits are without merit and intend to vigorously defend against all claims asserted.
We are also party to various legal proceedings and claims that arise in the ordinary course of business. Among these pending matters, one case is currently scheduled for trial in the near future. ZeniMax Media Inc. v. Oculus VR Inc., is scheduled to begin trial in January 2017, in the U.S. District Court for the Northern District of Texas. In the ZeniMax case, the plaintiff asserts a number of claims against us, including trade secret misappropriation, copyright infringement, tortious interference with contract, unfair competition, unjust enrichment, trademark infringement, and false designation. The plaintiff is seeking significant monetary damages and equitable relief, including an injunction. We believe the claims made by the plaintiff in the ZeniMax case are without merit, and we intend to defend ourselves vigorously. Because the outcome of litigation is inherently uncertain, we believe it is reasonably possible that we may incur a loss in connection with this matter. However, we do not believe a material loss is probable and we are unable to estimate a reasonable range of loss, if any, that could result were there to be an adverse final decision, and we therefore have not accrued a liability for this matter. If an unfavorable outcome were to occur in this case, it is possible that the impact could be material to our results in the period(s) in which any such outcome becomes probable and estimable.
With respect to our other outstanding legal matters, we believe that the amount or estimable range of reasonably possible loss will not, either individually or in the aggregate, have a material adverse effect on our business, consolidated financial position, results of operations, or cash flows. However, the outcome of litigation is inherently uncertain. Therefore, if one or more of these legal matters were resolved against us for amounts in excess of management's expectations, our results of operations and financial condition, including in a particular reporting period, could be materially adversely affected.
For information regarding income tax contingencies, see Note 10 — Income Taxes.
Stockholders' Equity
Stockholders' Equity
Stockholders' Equity
Reclassification
In April 2016, our board of directors approved the Reclassification by approving amendments to our restated certificate of incorporation (the New Certificate) that would, among other things, create non-voting Class C capital stock. The Class C capital stock will have the same rights and powers, rank equally (including as to dividends and distributions, mergers or similar business combinations, and in connection with any liquidation, dissolution or winding up of the corporation), share ratably and be identical in all other respects and as to all matters to the shares of Class A and Class B common stock, except for voting rights and as expressly provided in the New Certificate. The New Certificate was approved by our stockholders on June 20, 2016. As of September 30, 2016, the New Certificate was not yet effective.
As part of the Reclassification, we announced that our board of directors intends to issue two shares of the Class C capital stock as a one-time stock dividend for each share of Class A and Class B common stock outstanding. The record and payment dates for this dividend will be determined by our board of directors in its discretion and there can be no assurance as to the timing of such dates. For accounting purposes, we expect this dividend will be treated as a stock split in the form of a dividend.
Share-based Compensation Plans
We maintain two share-based employee compensation plans: the 2012 Equity Incentive Plan (2012 Plan) and the 2005 Stock Plan (collectively, Stock Plans). Our 2012 Plan serves as the successor to our 2005 Stock Plan and provides for the issuance of incentive and nonstatutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance shares, and stock bonuses to qualified employees, directors and consultants. Outstanding awards under the 2005 Stock Plan continue to be subject to the terms and conditions of the 2005 Stock Plan. Our board of directors approved the amendment and restatement of our 2012 Plan (the Amended 2012 Plan), which was approved by our stockholders and adopted by us in June 2016.
We initially reserved 25 million shares of our Class A common stock for issuance under our 2012 Plan. Following the date of the stock dividend described above, if it is declared and paid, the shares reserved and available for issuance under our Amended 2012 Plan will be shares of the new Class C Capital Stock, except for shares reserved for awards outstanding immediately prior to the payment of the dividend. The number of shares reserved for issuance under our Amended 2012 Plan increases automatically on January 1 of each of the calendar years during the term of the Amended 2012 Plan, which will continue through and including April 2026 unless terminated earlier by our board of directors or a committee thereof, by a number of shares of Class C capital stock (and prior to the date of the payment of the stock dividend described above, Class A common stock) equal to the lesser of (i) 2.5% of the total issued and outstanding shares of our Class A common stock and Class C capital stock as of the immediately preceding December 31st or (ii) a number of shares determined by our board of directors. Our board of directors elected not to increase the number of shares reserved for issuance in 2016.
The following table summarizes the activities of stock option awards under the Stock Plans for the nine months ended September 30, 2016: 
 
Shares Subject to Options Outstanding
 
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value(1)
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Balance as of December 31, 2015
8,443

 
$
7.10

 
 
 
 
Stock options exercised
(2,127
)
 
5.21

 
 
 
 
Balance as of September 30, 2016
6,316

 
$
7.74

 
3.1
 
$
761

Stock options vested and expected to vest as of September 30, 2016
6,315

 
$
7.74

 
3.1
 
$
761

Stock options exercisable as of September 30, 2016
4,827

 
$
5.99

 
2.9
 
$
590

(1)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the official closing price of our Class A common stock of $128.27, as reported on the NASDAQ Global Select Market on September 30, 2016.
The following table summarizes the activities for our unvested RSUs for the nine months ended September 30, 2016:
 
Unvested RSUs(1)
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in thousands)
 
 
Unvested at December 31, 2015
116,409

 
$
65.95

Granted
26,264

 
112.08

Vested
(33,820
)
 
58.27

Forfeited
(4,351
)
 
73.91

Unvested at September 30, 2016
104,502

 
$
79.69


(1)
Unvested shares include inducement awards issued in connection with an acquisition in 2014 and are subject to the terms, restrictions, and conditions of separate non-plan RSU award agreements.
The fair value as of the respective vesting dates of RSUs that vested during the three and nine months ended September 30, 2016 was $1.21 billion and $3.84 billion, respectively, and $894 million and $2.38 billion, respectively, during the three and nine months ended September 30, 2015.
As of September 30, 2016, there was $7.48 billion of unrecognized share-based compensation expense, of which (i) $7.15 billion was related to RSUs, and (ii) $323 million was related to restricted shares, shares related to our contingent consideration with performance conditions that were met in the second quarter of 2016 but are still subject to service condition, and stock options. This unrecognized compensation expense is expected to be recognized over a weighted-average period of approximately three years.
Income Taxes
Income Taxes
Income Taxes
Our tax provision for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items arising in that quarter. In each quarter, we update our estimate of the annual effective tax rate, and if our estimated annual tax rate changes, we make a cumulative adjustment in that quarter. Our quarterly tax provision, and our quarterly estimate of our annual effective tax rate, are subject to significant volatility due to several factors, including our ability to accurately predict our income (loss) before provision for income taxes in multiple jurisdictions, including the portions of our share-based compensation that will not generate tax benefits, and the effects of acquisitions and the integration of those acquisitions. In addition, our effective tax rate can be more or less volatile based on the amount of income before provision for income taxes.
Our effective tax rate is lower than the United States statutory rate primarily because of income in jurisdictions with tax rates lower than that of the United States. We have not provided United States taxes for all foreign earnings because we intend to indefinitely reinvest a substantial portion of those earnings outside of the United States. Our effective tax rate in the future will depend on the portion of our profits earned within and outside the United States, which will also be affected by our methodologies for valuing our intellectual property and intercompany transactions.
We are subject to taxation in the United States and various other state and foreign jurisdictions. The material jurisdictions in which we are subject to potential examination include the United States and Ireland. We are under examination by the Internal Revenue Service (IRS) for our 2010 through 2013 tax years. Our 2014 and subsequent years remain open to examination by the IRS. Our 2011 and subsequent years remain open to examination in Ireland. In July 2016, we received a Statutory Notice of Deficiency (Notice) from the IRS relating to transfer pricing with our foreign subsidiaries in conjunction with the examination of the 2010 tax year. While the Notice applies only to the 2010 tax year, the IRS states that it will also apply its position for tax years subsequent to 2010, which, if the IRS prevails in its position, could result in an additional federal tax liability of an estimated aggregate amount of approximately $3.0 billion to $5.0 billion, plus interest and any penalties asserted. We do not agree with the position of the IRS and have filed a petition in the United States Tax Court challenging the Notice. If the IRS prevails in the assessment of additional tax due based on its position, the assessed tax, interest and penalties, if any, could have a material adverse impact on our financial position, results of operations or cash flows.
Our gross unrecognized tax benefits were $3.20 billion and $3.02 billion as of September 30, 2016 and December 31, 2015, respectively. If the gross unrecognized tax benefits as of September 30, 2016 were realized in a subsequent period, this would result in a tax benefit of $2.53 billion within our provision of income taxes at such time. Our existing tax positions will continue to generate an increase in unrecognized tax benefits in subsequent periods. 
Although the timing of the resolution, settlement, and closure of any audits is highly uncertain, it is reasonably possible that the balance of gross unrecognized tax benefits could significantly change in the next 12 months. Given the number of years remaining that are subject to examination, we are unable to estimate the full range of possible adjustments to the balance of gross unrecognized tax benefits, however, we do not anticipate a significant impact to such amount within the next 12 months.
Geographical Information
Geographical Information
Geographical Information
Revenue by geography is based on the billing address of the marketer or developer. The following tables set forth revenue and property and equipment, net by geographic area (in millions):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenue:
 
 
 
 
 
 
 
United States
$
3,184

 
$
2,166

 
$
8,545

 
$
5,699

Rest of the world (1)
3,827

 
2,335

 
10,284

 
6,388

Total revenue
$
7,011

 
$
4,501

 
$
18,829

 
$
12,087

 
(1)
No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented.
 
September 30,
2016
 
December 31,
2015
Property and equipment, net:
 
 
 
United States
$
6,239

 
$
4,498

Rest of the world (1)
1,660

 
1,189

Total property and equipment, net
$
7,899

 
$
5,687

 
(1)
As of September 30, 2016, property and equipment, net in Sweden no longer exceeded 10% of our total property and equipment, net. As of December 31, 2015, such balance was $713 million. Other than disclosed, no individual country exceeded 10% of our total property and equipment, net for any period presented.
Summary of Significant Accounting Policies (Policies)
Basis of Presentation 
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (GAAP) and applicable rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
The condensed consolidated balance sheet as of December 31, 2015 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP.
The condensed consolidated financial statements include the accounts of Facebook, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated.
The accompanying condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2016.
There have been no changes to our significant accounting policies described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 that have had a material impact on our condensed consolidated financial statements and related notes.
Use of Estimates 
Use of Estimates
Conformity with GAAP requires the use of estimates and judgments that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. These estimates form the basis for judgments we make about the carrying values of our assets and liabilities, which are not readily apparent from other sources. We base our estimates and judgments on historical information and on various other assumptions that we believe are reasonable under the circumstances. GAAP requires us to make estimates and judgments in several areas, including, but not limited to, those related to revenue recognition, collectability of accounts receivable, contingent liabilities, fair value of financial instruments, fair value of acquired intangible assets and goodwill, useful lives of intangible assets and property and equipment, and income taxes. These estimates are based on management's knowledge about current events and expectations about actions we may undertake in the future. Actual results could differ materially from those estimates.
Recently Issued or Adopted Accounting Pronouncements 
Recently Issued or Adopted Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), which generally requires companies to recognize operating and financing lease liabilities and corresponding right-of-use assets on the balance sheet. This guidance will be effective for us in the first quarter of 2019 on a modified retrospective basis and early adoption is permitted. We are still evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.
In March 2016, the FASB issued Accounting Standards Update No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (ASU 2016-08) which clarifies the implementation guidance on principal versus agent considerations. The guidance includes indicators to assist an entity in determining whether it controls a specified good or service before it is transferred to the customers. This guidance will be effective for us in the first quarter of 2018, with the option to adopt it in the first quarter of 2017. We are still evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.
In March 2016, the FASB issued Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting (ASU 2016-09) to simplify the accounting for share-based payment transactions, including the income tax consequences, an option to recognize gross share-based compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. This guidance will be effective for us in the first quarter of 2017, and early adoption is permitted. We are still evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures; however, we anticipate the impact will reduce our effective tax rate.
In August 2016, the FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230) (ASU 2016-15), which addresses eight specific cash flow classification issues to reduce diversity in practice. This guidance will be effective for us in the first quarter of 2017 on a retrospective basis and early adoption is permitted. We elected to early adopt this guidance in the third quarter of 2016 on a retrospective basis. There was no reclassification impact of the adoption on our condensed consolidated statement of cash flows for the nine months ended September 30, 2016 and 2015, and such statements have been presented in accordance with this new guidance.
Earnings per Share (Tables)
Numerators and Denominators of Basic and Diluted EPS Computations for Common Stock
The numerators and denominators of the basic and diluted EPS computations for our common stock are calculated as follows (in millions, except per share amounts): 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
 
Class A
 
Class B
Basic EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
$
1,925

 
$
454

 
$
719

 
$
177

 
$
4,806

 
$
1,138

 
$
1,705

 
$
422

Less: Net income attributable to participating securities
5

 
1

 
4

 
1

 
15

 
3

 
9

 
3

Net income attributable to common stockholders
$
1,920

 
$
453

 
$
715

 
$
176

 
$
4,791

 
$
1,135

 
$
1,696

 
$
419

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average shares outstanding
2,328

 
550

 
2,264

 
558

 
2,316

 
549

 
2,253

 
559

Less: Shares subject to repurchase
5

 
2

 
10

 
4

 
6

 
2

 
11

 
5

Number of shares used for basic EPS computation
2,323

 
548

 
2,254

 
554

 
2,310

 
547

 
2,242

 
554

Basic EPS
$
0.83

 
$
0.83

 
$
0.32

 
$
0.32

 
$
2.07

 
$
2.07

 
$
0.76

 
$
0.76

Diluted EPS:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Numerator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income attributable to common stockholders
$
1,920

 
$
453

 
$
715

 
$
176

 
$
4,791

 
$
1,135

 
$
1,696

 
$
419

Reallocation of net income attributable to participating securities
6

 
—

 
5

 
—

 
18

 
—

 
12

 
—

Reallocation of net income as a result of conversion of Class B to Class A common stock
453

 
—

 
176

 
—

 
1,135

 
—

 
419

 
—

Reallocation of net income to Class B common stock
—

 
2

 
—

 
3

 
—

 
9

 
—

 
10

Net income attributable to common stockholders for diluted EPS
$
2,379

 
$
455

 
$
896

 
$
179

 
$
5,944

 
$
1,144

 
$
2,127

 
$
429

Denominator
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of shares used for basic EPS computation
2,323

 
548

 
2,254

 
554

 
2,310

 
547

 
2,242

 
554

Conversion of Class B to Class A common stock
548

 
—

 
554

 
—

 
547

 
—

 
554

 
—

Weighted average effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Employee stock options
4

 
4

 
7

 
7

 
5

 
5

 
8

 
8

RSUs
35

 
3

 
42

 
8

 
34

 
5

 
39

 
10

Shares subject to repurchase
4

 
1

 
6

 
2

 
5

 
1

 
5

 
2

Earn-out shares
1

 
1

 
—

 
—

 
1

 
1

 
—

 
—

Number of shares used for diluted EPS computation
2,915

 
557

 
2,863

 
571

 
2,902

 
559

 
2,848

 
574

Diluted EPS
$
0.82

 
$
0.82

 
$
0.31

 
$
0.31

 
$
2.05

 
$
2.05

 
$
0.75

 
$
0.75

Cash and Cash Equivalents, and Marketable Securities (Tables)
Cash and Cash Equivalents, and Marketable Securities 
The following table sets forth the cash and cash equivalents, and marketable securities (in millions):
 
September 30, 2016
 
December 31, 2015
Cash and cash equivalents:
 
 
 
Cash
$
1,953

 
$
1,703

Money market funds
2,347

 
2,409

U.S. government securities
900

 
597

U.S. government agency securities
705

 
145

Corporate debt securities
133

 
53

Total cash and cash equivalents
6,038

 
4,907

Marketable securities:
 
 
 
U.S. government securities
7,416

 
5,948

U.S. government agency securities
6,738

 
4,475

Corporate debt securities
5,948

 
3,104

Total marketable securities
20,102

 
13,527

Total cash and cash equivalents, and marketable securities
$
26,140

 
$
18,434

Marketable Securities by Contractual Maturities 
The following table classifies our marketable securities by contractual maturities (in millions):
 
September 30, 2016
Due in one year
$
4,898

Due in one to five years
15,204

Total
$
20,102

Fair Value Measurement (Tables)
Assets and Liabilities Measured at Fair Value
The following table summarizes, for assets or liabilities measured at fair value, the respective fair value and the classification by level of input within the fair value hierarchy (in millions): 
 
 
 
 
Fair Value Measurement at
Reporting Date Using
Description
 
September 30, 2016
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
 
Money market funds
 
$
2,347

 
$
2,347

 
$
—

 
$
—

U.S. government securities
 
900

 
900

 
—

 
—

U.S. government agency securities
 
705

 
705

 
—

 
—

Corporate debt securities
 
133

 
—

 
133

 
—

Marketable securities:
 
 
 
 
 
 
 
 
U.S. government securities
 
7,416

 
7,416

 
—

 
—

U.S. government agency securities
 
6,738

 
6,738

 
—

 
—

Corporate debt securities
 
5,948

 
—

 
5,948

 
—

Total cash equivalents and marketable securities
 
$
24,187

 
$
18,106

 
$
6,081

 
$
—

 
 
 
 
 
 
 
 
 
Accrued expenses and other current liabilities:
 
 
 
 
 
 
 
 
Contingent consideration liability
 
$
263

 
$
—

 
$
263

 
$
—

 
 
 
 
Fair Value Measurement at
Reporting Date Using
Description
 
December 31, 2015
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
 
 
 
 
 
 
 
 
Money market funds
 
$
2,409

 
$
2,409

 
$
—

 
$
—

U.S. government securities
 
597

 
597

 
—

 
—

U.S. government agency securities
 
145

 
145

 
—

 
—

Corporate debt securities
 
53

 
—

 
53

 
—

Marketable securities:
 
 
 
 
 
 
 
 
U.S. government securities
 
5,948

 
5,948

 
—

 
—

U.S. government agency securities
 
4,475

 
4,475

 
—

 
—

Corporate debt securities
 
3,104

 
—

 
3,104

 
—

Total cash equivalents and marketable securities
 
$
16,731

 
$
13,574

 
$
3,157

 
$
—

 
 
 
 
 
 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
 
Contingent consideration liability
 
$
260

 
$
—

 
$
—

 
$
260

Property and Equipment (Tables)
Property and Equipment
Property and equipment consists of the following (in millions): 
 
September 30,
2016
 
December 31,
2015
Land
$
692

 
$
596

Buildings
2,687

 
2,273

Leasehold improvements
474

 
447

Network equipment
4,734

 
3,633

Computer software, office equipment and other
351

 
248

Construction in progress
1,840

 
622

Total
10,778

 
7,819

Less: Accumulated depreciation
(2,879
)
 
(2,132
)
Property and equipment, net
$
7,899

 
$
5,687

Goodwill and Intangible Assets (Tables)
Changes in Carrying Amount of Goodwill 
The changes in the carrying amount of goodwill for the nine months ended September 30, 2016 are as follows (in millions): 
Balance as of December 31, 2015
$
18,026

Goodwill acquired
56

Effect of currency translation adjustment
3

Balance as of September 30, 2016
$
18,085

Schedule of Finite-Lived Intangible Assets 
Intangible assets consist of the following (in millions):
 
 
 
September 30, 2016
 
December 31, 2015
 
Weighted-Average Remaining Useful Lives (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired users
5.0
 
$
2,056

 
$
(604
)
 
$
1,452

 
$
2,056

 
$
(382
)
 
$
1,674

Acquired technology
3.8
 
915

 
(462
)
 
453

 
831

 
(310
)
 
521

Acquired patents
6.1
 
785

 
(399
)
 
386

 
785

 
(333
)
 
452

Trade names
3.4
 
629

 
(265
)
 
364

 
629

 
(163
)
 
466

Other
3.5
 
162

 
(115
)
 
47

 
162

 
(89
)
 
73

Total finite-lived intangible assets
4.7
 
$
4,547

 
$
(1,845
)
 
$
2,702

 
$
4,463

 
$
(1,277
)
 
$
3,186

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
In-process research and development (IPR&D)
 
 
$
—

 
$
—

 
$
—

 
$
60

 
$
—

 
$
60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intangible assets
 
 
$
4,547

 
$
(1,845
)
 
$
2,702

 
$
4,523

 
$
(1,277
)
 
$
3,246

Schedule of Indefinite-Lived Intangible Assets 
Intangible assets consist of the following (in millions):
 
 
 
September 30, 2016
 
December 31, 2015
 
Weighted-Average Remaining Useful Lives (in years)
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net Carrying Amount
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Acquired users
5.0
 
$
2,056

 
$
(604
)
 
$
1,452

 
$
2,056

 
$
(382
)
 
$
1,674

Acquired technology
3.8
 
915

 
(462
)
 
453

 
831

 
(310
)
 
521

Acquired patents
6.1
 
785

 
(399
)
 
386

 
785

 
(333
)
 
452

Trade names
3.4
 
629

 
(265
)
 
364

 
629

 
(163
)
 
466

Other
3.5
 
162

 
(115
)
 
47

 
162

 
(89
)
 
73

Total finite-lived intangible assets
4.7
 
$
4,547

 
$
(1,845
)
 
$
2,702

 
$
4,463

 
$
(1,277
)
 
$
3,186

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Indefinite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
In-process research and development (IPR&D)
 
 
$
—

 
$
—

 
$
—

 
$
60

 
$
—

 
$
60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total intangible assets
 
 
$
4,547

 
$
(1,845
)
 
$
2,702

 
$
4,523

 
$
(1,277
)
 
$
3,246

Expected Amortization Expense for Unamortized Acquired Intangible Assets 
As of September 30, 2016, expected amortization expense for the unamortized acquired intangible assets for the next five years and thereafter is as follows (in millions):
The remainder of 2016
$
182

2017
681

2018
614

2019
522

2020
357

Thereafter
346

Total
$
2,702

Stockholders' Equity (Tables)
Stock Option Activity under Stock Plans 
The following table summarizes the activities of stock option awards under the Stock Plans for the nine months ended September 30, 2016: 
 
Shares Subject to Options Outstanding
 
Number of
Shares
 
Weighted
Average
Exercise
Price
 
Weighted
Average
Remaining
Contractual
Term
 
Aggregate
Intrinsic
Value(1)
 
(in thousands)
 
 
 
(in years)
 
(in millions)
Balance as of December 31, 2015
8,443

 
$
7.10

 
 
 
 
Stock options exercised
(2,127
)
 
5.21

 
 
 
 
Balance as of September 30, 2016
6,316

 
$
7.74

 
3.1
 
$
761

Stock options vested and expected to vest as of September 30, 2016
6,315

 
$
7.74

 
3.1
 
$
761

Stock options exercisable as of September 30, 2016
4,827

 
$
5.99

 
2.9
 
$
590

(1)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock option awards and the official closing price of our Class A common stock of $128.27, as reported on the NASDAQ Global Select Market on September 30, 2016.
Restricted Stock Units Award Activity 
The following table summarizes the activities for our unvested RSUs for the nine months ended September 30, 2016:
 
Unvested RSUs(1)
 
Number of Shares
 
Weighted Average Grant Date Fair Value
 
(in thousands)
 
 
Unvested at December 31, 2015
116,409

 
$
65.95

Granted
26,264

 
112.08

Vested
(33,820
)
 
58.27

Forfeited
(4,351
)
 
73.91

Unvested at September 30, 2016
104,502

 
$
79.69


(1)
Unvested shares include inducement awards issued in connection with an acquisition in 2014 and are subject to the terms, restrictions, and conditions of separate non-plan RSU award agreements.
Geographical Information (Tables)
Revenue and Property and Equipment by Geographic Area
Revenue by geography is based on the billing address of the marketer or developer. The following tables set forth revenue and property and equipment, net by geographic area (in millions):
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Revenue:
 
 
 
 
 
 
 
United States
$
3,184

 
$
2,166

 
$
8,545

 
$
5,699

Rest of the world (1)
3,827

 
2,335

 
10,284

 
6,388

Total revenue
$
7,011

 
$
4,501

 
$
18,829

 
$
12,087

 
(1)
No individual country, other than disclosed above, exceeded 10% of our total revenue for any period presented.
 
September 30,
2016
 
December 31,
2015
Property and equipment, net:
 
 
 
United States
$
6,239

 
$
4,498

Rest of the world (1)
1,660

 
1,189

Total property and equipment, net
$
7,899

 
$
5,687

 
(1)
As of September 30, 2016, property and equipment, net in Sweden no longer exceeded 10% of our total property and equipment, net. As of December 31, 2015, such balance was $713 million. Other than disclosed, no individual country exceeded 10% of our total property and equipment, net for any period presented.
Earnings per Share (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Numerator
 
 
 
 
Net income
$ 2,379 
$ 896 
$ 5,944 
$ 2,127 
Less: Net income attributable to participating securities
6 
5 
18 
12 
Net income attributable to Class A and Class B common stockholders
2,373 
891 
5,926 
2,115 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
2,871 
2,808 
2,857 
2,796 
Basic EPS (in dollars per share)
$ 0.83 
$ 0.32 
$ 2.07 
$ 0.76 
Numerator
 
 
 
 
Net income attributable to common stockholders
2,373 
891 
5,926 
2,115 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
2,871 
2,808 
2,857 
2,796 
Number of shares used for diluted EPS computation (in shares)
2,915 
2,863 
2,902 
2,848 
Diluted EPS (in dollars per share)
$ 0.82 
$ 0.31 
$ 2.05 
$ 0.75 
Class A Common Stock
 
 
 
 
Numerator
 
 
 
 
Net income
1,925 
719 
4,806 
1,705 
Less: Net income attributable to participating securities
5 
4 
15 
9 
Net income attributable to Class A and Class B common stockholders
1,920 
715 
4,791 
1,696 
Denominator
 
 
 
 
Weighted average shares outstanding (in shares)
2,328 
2,264 
2,316 
2,253 
Less: Shares subject to repurchase (in shares)
5 
10 
6 
11 
Number of shares used for basic EPS computation (in shares)
2,323 
2,254 
2,310 
2,242 
Basic EPS (in dollars per share)
$ 0.83 
$ 0.32 
$ 2.07 
$ 0.76 
Numerator
 
 
 
 
Net income attributable to common stockholders
1,920 
715 
4,791 
1,696 
Reallocation of net income attributable to participating securities
6 
5 
18 
12 
Reallocation of net income as a result of conversion of Class B to Class A common stock
453 
176 
1,135 
419 
Reallocation of net income to Class B common stock
0 
0 
0 
0 
Net income attributable to common stockholders for diluted EPS
2,379 
896 
5,944 
2,127 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
2,323 
2,254 
2,310 
2,242 
Conversion of Class B to Class A common stock (in shares)
548 
554 
547 
554 
Shares subject to repurchase (in shares)
4 
6 
5 
5 
Earn-out shares (in shares)
1 
0 
1 
0 
Number of shares used for diluted EPS computation (in shares)
2,915 
2,863 
2,902 
2,848 
Diluted EPS (in dollars per share)
$ 0.82 
$ 0.31 
$ 2.05 
$ 0.75 
Class A Common Stock |
Employee Stock Options
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
4 
7 
5 
8 
Class A Common Stock |
Restricted Stock Units (RSUs)
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
35 
42 
34 
39 
Class B Common Stock
 
 
 
 
Numerator
 
 
 
 
Net income
454 
177 
1,138 
422 
Less: Net income attributable to participating securities
1 
1 
3 
3 
Net income attributable to Class A and Class B common stockholders
453 
176 
1,135 
419 
Denominator
 
 
 
 
Weighted average shares outstanding (in shares)
550 
558 
549 
559 
Less: Shares subject to repurchase (in shares)
2 
4 
2 
5 
Number of shares used for basic EPS computation (in shares)
548 
554 
547 
554 
Basic EPS (in dollars per share)
$ 0.83 
$ 0.32 
$ 2.07 
$ 0.76 
Numerator
 
 
 
 
Net income attributable to common stockholders
453 
176 
1,135 
419 
Reallocation of net income attributable to participating securities
0 
0 
0 
0 
Reallocation of net income as a result of conversion of Class B to Class A common stock
0 
0 
0 
0 
Reallocation of net income to Class B common stock
2 
3 
9 
10 
Net income attributable to common stockholders for diluted EPS
$ 455 
$ 179 
$ 1,144 
$ 429 
Denominator
 
 
 
 
Number of shares used for basic EPS computation (in shares)
548 
554 
547 
554 
Conversion of Class B to Class A common stock (in shares)
0 
0 
0 
0 
Shares subject to repurchase (in shares)
1 
2 
1 
2 
Earn-out shares (in shares)
1 
0 
1 
0 
Number of shares used for diluted EPS computation (in shares)
557 
571 
559 
574 
Diluted EPS (in dollars per share)
$ 0.82 
$ 0.31 
$ 2.05 
$ 0.75 
Class B Common Stock |
Employee Stock Options
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
4 
7 
5 
8 
Class B Common Stock |
Restricted Stock Units (RSUs)
 
 
 
 
Denominator
 
 
 
 
Share based payment arrangements (in shares)
3 
8 
5 
10 
Cash and Cash Equivalents, and Marketable Securities (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Sep. 30, 2015
Dec. 31, 2014
Cash and Cash Equivalents, and Marketable Securities
 
 
 
 
Cash and cash equivalents
$ 6,038 
$ 4,907 
$ 4,308 
$ 4,315 
Marketable securities
20,102 
13,527 
 
 
Total cash and cash equivalents, and marketable securities
26,140 
18,434 
 
 
U.S. government securities
 
 
 
 
Cash and Cash Equivalents, and Marketable Securities
 
 
 
 
Marketable securities
7,416 
5,948 
 
 
U.S. government agency securities
 
 
 
 
Cash and Cash Equivalents, and Marketable Securities
 
 
 
 
Marketable securities
6,738 
4,475 
 
 
Corporate debt securities
 
 
 
 
Cash and Cash Equivalents, and Marketable Securities
 
 
 
 
Marketable securities
5,948 
3,104 
 
 
Cash
 
 
 
 
Cash and Cash Equivalents, and Marketable Securities
 
 
 
 
Cash and cash equivalents
1,953 
1,703 
 
 
Money market funds
 
 
 
 
Cash and Cash Equivalents, and Marketable Securities
 
 
 
 
Cash and cash equivalents
2,347 
2,409 
 
 
U.S. government securities
 
 
 
 
Cash and Cash Equivalents, and Marketable Securities
 
 
 
 
Cash and cash equivalents
900 
597 
 
 
U.S. government agency securities
 
 
 
 
Cash and Cash Equivalents, and Marketable Securities
 
 
 
 
Cash and cash equivalents
705 
145 
 
 
Corporate debt securities
 
 
 
 
Cash and Cash Equivalents, and Marketable Securities
 
 
 
 
Cash and cash equivalents
$ 133 
$ 53 
 
 
Cash and Cash Equivalents, and Marketable Securities - Contractual Maturities of Debt Securities (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Cash and Cash Equivalents, and Marketable Securities [Abstract]
 
 
Due in one year
$ 4,898 
 
Due in one to five years
15,204 
 
Total marketable securities
$ 20,102 
$ 13,527 
Fair Value Measurement (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2016
Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
$ 20,102 
$ 20,102 
$ 13,527 
Change in fair value of contingent consideration liability
20 
87 
 
U.S. government securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
7,416 
7,416 
5,948 
U.S. government agency securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
6,738 
6,738 
4,475 
Corporate debt securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
5,948 
5,948 
3,104 
Fair Value, Measurements, Recurring
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Total cash equivalents and marketable securities
24,187 
24,187 
16,731 
Fair Value, Measurements, Recurring |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Total cash equivalents and marketable securities
18,106 
18,106 
13,574 
Fair Value, Measurements, Recurring |
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Total cash equivalents and marketable securities
6,081 
6,081 
3,157 
Fair Value, Measurements, Recurring |
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Total cash equivalents and marketable securities
0 
0 
0 
Fair Value, Measurements, Recurring |
Accrued Expenses and Other Current Liabilities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Contingent consideration liability
263 
263 
 
Fair Value, Measurements, Recurring |
Accrued Expenses and Other Current Liabilities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Contingent consideration liability
0 
0 
 
Fair Value, Measurements, Recurring |
Accrued Expenses and Other Current Liabilities |
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Contingent consideration liability
263 
263 
 
Fair Value, Measurements, Recurring |
Accrued Expenses and Other Current Liabilities |
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Contingent consideration liability
0 
0 
 
Fair Value, Measurements, Recurring |
Other Liabilities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Contingent consideration liability
 
 
260 
Fair Value, Measurements, Recurring |
Other Liabilities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Contingent consideration liability
 
 
0 
Fair Value, Measurements, Recurring |
Other Liabilities |
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Contingent consideration liability
 
 
0 
Fair Value, Measurements, Recurring |
Other Liabilities |
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Contingent consideration liability
 
 
260 
Fair Value, Measurements, Recurring |
U.S. government securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
7,416 
7,416 
5,948 
Fair Value, Measurements, Recurring |
U.S. government securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
7,416 
7,416 
5,948 
Fair Value, Measurements, Recurring |
U.S. government securities |
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
0 
0 
0 
Fair Value, Measurements, Recurring |
U.S. government securities |
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
0 
0 
0 
Fair Value, Measurements, Recurring |
U.S. government agency securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
6,738 
6,738 
4,475 
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
6,738 
6,738 
4,475 
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
0 
0 
0 
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
0 
0 
0 
Fair Value, Measurements, Recurring |
Corporate debt securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
5,948 
5,948 
3,104 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
0 
0 
0 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
5,948 
5,948 
3,104 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Marketable securities
0 
0 
0 
Fair Value, Measurements, Recurring |
Money market funds
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
2,347 
2,347 
2,409 
Fair Value, Measurements, Recurring |
Money market funds |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
2,347 
2,347 
2,409 
Fair Value, Measurements, Recurring |
Money market funds |
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
0 
0 
0 
Fair Value, Measurements, Recurring |
Money market funds |
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
0 
0 
0 
Fair Value, Measurements, Recurring |
U.S. government securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
900 
900 
597 
Fair Value, Measurements, Recurring |
U.S. government securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
900 
900 
597 
Fair Value, Measurements, Recurring |
U.S. government securities |
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
0 
0 
0 
Fair Value, Measurements, Recurring |
U.S. government securities |
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
0 
0 
0 
Fair Value, Measurements, Recurring |
U.S. government agency securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
705 
705 
145 
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
705 
705 
145 
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
0 
0 
0 
Fair Value, Measurements, Recurring |
U.S. government agency securities |
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
0 
0 
0 
Fair Value, Measurements, Recurring |
Corporate debt securities
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
133 
133 
53 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Quoted Prices in Active Markets for Identical Assets (Level 1)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
0 
0 
0 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Significant Other Observable Inputs (Level 2)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
133 
133 
53 
Fair Value, Measurements, Recurring |
Corporate debt securities |
Significant Unobservable Inputs (Level 3)
 
 
 
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
 
 
 
Cash equivalents
$ 0 
$ 0 
$ 0 
Property and Equipment (Detail) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Property, Plant and Equipment
 
 
 
 
 
Property and equipment, gross
$ 10,778,000,000 
 
$ 10,778,000,000 
 
$ 7,819,000,000 
Less: Accumulated depreciation
(2,879,000,000)
 
(2,879,000,000)
 
(2,132,000,000)
Property and equipment, net
7,899,000,000 
 
7,899,000,000 
 
5,687,000,000 
Interest costs capitalized
0 
0 
0 
0 
 
Land
 
 
 
 
 
Property, Plant and Equipment
 
 
 
 
 
Property and equipment, gross
692,000,000 
 
692,000,000 
 
596,000,000 
Buildings
 
 
 
 
 
Property, Plant and Equipment
 
 
 
 
 
Property and equipment, gross
2,687,000,000 
 
2,687,000,000 
 
2,273,000,000 
Leasehold improvements
 
 
 
 
 
Property, Plant and Equipment
 
 
 
 
 
Property and equipment, gross
474,000,000 
 
474,000,000 
 
447,000,000 
Network equipment
 
 
 
 
 
Property, Plant and Equipment
 
 
 
 
 
Property and equipment, gross
4,734,000,000 
 
4,734,000,000 
 
3,633,000,000 
Computer software, office equipment and other
 
 
 
 
 
Property, Plant and Equipment
 
 
 
 
 
Property and equipment, gross
351,000,000 
 
351,000,000 
 
248,000,000 
Construction in progress
 
 
 
 
 
Property, Plant and Equipment
 
 
 
 
 
Property and equipment, gross
$ 1,840,000,000 
 
$ 1,840,000,000 
 
$ 622,000,000 
Goodwill and Intangible Assets - Change in Carrying Amount (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Goodwill
 
Goodwill beginning
$ 18,026 
Goodwill acquired
56 
Effect of currency translation adjustment
3 
Goodwill ending
$ 18,085 
Goodwill and Intangible Assets - Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
 
 
 
 
 
Total intangible assets, gross
$ 4,547 
 
$ 4,547 
 
$ 4,523 
Total intangible assets, net
2,702 
 
2,702 
 
3,246 
Amortization expense
195 
180 
568 
539 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Weighted Average Remaining Useful Life (in years)
 
 
4 years 8 months 13 days 
 
 
Gross Carrying Amount
4,547 
 
4,547 
 
4,463 
Accumulated Amortization
(1,845)
 
(1,845)
 
(1,277)
Net Carrying Amount
2,702 
 
2,702 
 
3,186 
In-process research and development (IPR&D)
 
 
 
 
 
Indefinite-lived Intangible Assets [Line Items]
 
 
 
 
 
Indefinite-lived intangible assets
0 
 
0 
 
60 
Acquired users
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Weighted Average Remaining Useful Life (in years)
 
 
5 years 0 months 0 days 
 
 
Gross Carrying Amount
2,056 
 
2,056 
 
2,056 
Accumulated Amortization
(604)
 
(604)
 
(382)
Net Carrying Amount
1,452 
 
1,452 
 
1,674 
Acquired technology
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Weighted Average Remaining Useful Life (in years)
 
 
3 years 9 months 19 days 
 
 
Gross Carrying Amount
915 
 
915 
 
831 
Accumulated Amortization
(462)
 
(462)
 
(310)
Net Carrying Amount
453 
 
453 
 
521 
Acquired patents
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Weighted Average Remaining Useful Life (in years)
 
 
6 years 1 month 6 days 
 
 
Gross Carrying Amount
785 
 
785 
 
785 
Accumulated Amortization
(399)
 
(399)
 
(333)
Net Carrying Amount
386 
 
386 
 
452 
Trade names
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Weighted Average Remaining Useful Life (in years)
 
 
3 years 4 months 23 days 
 
 
Gross Carrying Amount
629 
 
629 
 
629 
Accumulated Amortization
(265)
 
(265)
 
(163)
Net Carrying Amount
364 
 
364 
 
466 
Other
 
 
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
 
 
Weighted Average Remaining Useful Life (in years)
 
 
3 years 6 months 1 day 
 
 
Gross Carrying Amount
162 
 
162 
 
162 
Accumulated Amortization
(115)
 
(115)
 
(89)
Net Carrying Amount
$ 47 
 
$ 47 
 
$ 73 
Goodwill and Intangible Assets - Estimated Amortization Expense (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract]
 
 
The remainder of 2016
$ 182 
 
2017
681 
 
2018
614 
 
2019
522 
 
2020
357 
 
Thereafter
346 
 
Net Carrying Amount
$ 2,702 
$ 3,186 
Long-term Debt (Details) (Revolving Credit Facility, USD $)
1 Months Ended
May 31, 2016
2013 Revolving Credit Facility
Sep. 30, 2016
2016 Facility
May 31, 2016
2016 Facility
Debt Instrument
 
 
 
Term period
5 years 
 
 
Maximum borrowing capacity
$ 6,500,000,000.0 
 
$ 2,000,000,000.0 
Amount outstanding
 
$ 0 
 
Commitments and Contingencies (Details) (USD $)
In Millions, except Share data, unless otherwise specified
0 Months Ended 3 Months Ended 9 Months Ended
Apr. 27, 2016
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Leases [Abstract]
 
 
 
 
 
Operating lease expense
 
$ 63 
$ 47 
$ 181 
$ 127 
Loss Contingency, Information about Litigation Matters [Abstract]
 
 
 
 
 
Stock dividend, number of shares of Class C capital stock each shareholder of Class A and Class B common stock will receive for every share they hold
2 
 
 
 
 
Minimum
 
 
 
 
 
Leases [Abstract]
 
 
 
 
 
Lease expiration year
 
 
 
2016 
 
Maximum
 
 
 
 
 
Leases [Abstract]
 
 
 
 
 
Lease expiration year
 
 
 
2032 
 
Stockholders' Equity - Share-based Compensation Plans (Detail)
0 Months Ended 9 Months Ended
Apr. 27, 2016
Sep. 30, 2016
plan
Sep. 30, 2016
2012 Plan
Sep. 30, 2016
2012 Plan
Maximum
Share-based Compensation Arrangement by Share-based Payment Award
 
 
 
 
Stock dividend, number of shares of Class C capital stock each shareholder of Class A and Class B common stock will receive for every share they hold
2 
 
 
 
Share-based employee compensation plans, number
 
2 
 
 
Equity incentive plan shares authorized
 
 
25,000,000 
 
Shares reserved for issuance increase, date range
 
 
 
Jan. 01, 2026 
Shares reserved for issuance increase, percentage
 
 
2.50% 
 
Stockholders' Equity - Stock Option Activity (Details) (USD $)
In Millions, except Share data in Thousands, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Class A Common Stock
 
Aggregate Intrinsic Value
 
Common stock, closing share price (in usd per share)
$ 128.27 
Employee Stock Options
 
Number of Shares
 
Beginning balance (in shares)
8,443 
Stock options exercised (in shares)
(2,127)
Ending balance (in shares)
6,316 
Stock options vested and expected to vest as of period end (in shares)
6,315 
Stock options exercisable as of period end (in shares)
4,827 
Weighted Average Exercise Price
 
Beginning balance (in dollars per share)
$ 7.10 
Stock options exercised (in dollars per share)
$ 5.21 
Ending balance (in dollars per share)
$ 7.74 
Stock options vested and expected to vest as of period end (in dollars per share)
$ 7.74 
Stock options exercisable as of period end (in dollars per share)
$ 5.99 
Weighted Average Remaining Contractual Term
 
Balance at period end
3 years 1 month 6 days 
Stock options vested and expected to vest as of period end
3 years 1 month 6 days 
Stock options exercisable as of period end
2 years 10 months 25 days 
Aggregate Intrinsic Value
 
Balance at period end
$ 761 1
Stock options vested and expected to vest as of period end
761 1
Stock options exercisable as of period end
$ 590 1
Stockholders' Equity - Restricted Stock Units (Details) (Restricted Stock Units (RSUs), USD $)
In Millions, except Share data in Thousands, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Restricted Stock Units (RSUs)
 
 
 
 
Number of Shares
 
 
 
 
Unvested at beginning of period (in shares)
 
 
116,409 1
 
Granted (in shares)
 
 
26,264 
 
Vested (in shares)
 
 
(33,820)
 
Forfeited (in shares)
 
 
(4,351)
 
Unvested at end of period (in shares)
104,502 1
 
104,502 1
 
Weighted Average Grant Date Fair Value
 
 
 
 
Unvested at beginning of period (in dollars per share)
 
 
$ 65.95 
 
Granted (in dollars per share)
 
 
$ 112.08 
 
Vested (in dollars per share)
 
 
$ 58.27 
 
Forfeited (in dollars per share)
 
 
$ 73.91 
 
Unvested at end of period (in dollars per share)
$ 79.69 
 
$ 79.69 
 
Fair value of vested RSUs
$ 1,210 
$ 894 
$ 3,840 
$ 2,380 
Stockholders' Equity - Additional Award Disclosures (Details) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Sep. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award
 
Unrecognized share-based compensation expense
$ 7,480 
Unrecognized share-based compensation expense recognition period (in years)
3 years 
Restricted Stock Units (RSUs)
 
Share-based Compensation Arrangement by Share-based Payment Award
 
Unrecognized share-based compensation expense
7,150 
Other Awards
 
Share-based Compensation Arrangement by Share-based Payment Award
 
Unrecognized share-based compensation expense
$ 323 
Income Tax (Details) (USD $)
In Billions, unless otherwise specified
1 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Jul. 31, 2016
Minimum
Jul. 31, 2016
Maximum
Income Tax Examination [Line Items]
 
 
 
 
Income tax examination, estimate of possible loss
 
 
$ 3.0 
$ 5.0 
Unrecognized tax benefits
3.20 
3.02 
 
 
Unrecognized tax benefits that would result in tax benefit if realized
$ 2.53 
 
 
 
Geographical Information - Revenue (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Sep. 30, 2015
Revenue by Geographical Area
 
 
 
 
Revenue
$ 7,011 
$ 4,501 
$ 18,829 
$ 12,087 
United States
 
 
 
 
Revenue by Geographical Area
 
 
 
 
Revenue
3,184 
2,166 
8,545 
5,699 
Rest of the world
 
 
 
 
Revenue by Geographical Area
 
 
 
 
Revenue
$ 3,827 1
$ 2,335 1
$ 10,284 1
$ 6,388 1
Geographical Information - Property and Equipment, Net (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Long-Lived Assets By Geographical Area
 
 
Total property and equipment, net
$ 7,899 
$ 5,687 
United States
 
 
Long-Lived Assets By Geographical Area
 
 
Total property and equipment, net
6,239 
4,498 
Rest of the world
 
 
Long-Lived Assets By Geographical Area
 
 
Total property and equipment, net
1,660 1
1,189 1
Sweden
 
 
Long-Lived Assets By Geographical Area
 
 
Total property and equipment, net
 
$ 713