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Revenue Recognition Accounting Policy

Facebook recognizes revenue once all of the following criteria have been met:

  • persuasive evidence of an arrangement exists;
  • delivery of Facebook's obligations to the customer has occurred;
  • the price is fixed or determinable; and
  • collectability of the related receivable is reasonably assured.

Advertising

Advertising revenue is generated by displaying ad products on Facebook, Instagram, Messenger, and third-party affiliated websites or mobile applications. The arrangements are evidenced by either online acceptance of terms and conditions or contracts that stipulate the types of advertising to be delivered, the timing and the pricing. Marketers pay for ad products either directly or through their relationships with advertising agencies, based on the number of impressions delivered or the number of actions, such as clicks, taken by Facebook's users.

Facebook recognizes revenue from the display of impression-based ads in the contracted period in which the impressions are delivered. Impressions are considered delivered when an ad is displayed to users. Facebook recognizes revenue from the delivery of action-based ads in the period in which a user takes the action the marketer contracted for. For advertising revenue arrangements where Facebook is not the primary obligor, Facebook recognizes revenue on a net basis.

Payments and Other Fees

Payments revenue is comprised of the net fee Facebook receives from developers using the Payments infrastructure.

Other fees revenue, which was not material for all periods presented in Facebook's financial statements, consists primarily of revenue from the delivery of virtual reality platform devices and various other sources.

Revenue is recognized net of applicable sales and other taxes.

Source: Facebook Inc., Annual Report

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Revenues as Reported

Facebook Inc., Income Statement, Revenues

USD $ in millions

 
12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Advertising
Payments and other fees
Revenue

Source: Facebook Inc. Annual Reports

Item Description The company
Revenue Aggregate revenue recognized during the period (derived from goods sold, services rendered, insurance premiums, or other activities that constitute an entity's earning process). For financial services companies, also includes investment and interest income, and sales and trading gains. Facebook Inc.'s revenue increased from 2015 to 2016 and from 2016 to 2017.

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