Restructuring

3 Months Ended

Mar. 31, 2023

Restructuring and Related Activities [Abstract]

2023 Restructuring

In March 2023, we announced three rounds of planned layoffs to further reduce our company size by approximately 10,000 employees across the Family of Apps (FoA) and Reality Labs (RL) segments (the “2023 Restructuring”). Impacted employees in our recruiting and technology teams were notified in March 2023 and April 2023, respectively. We expect to notify employees in our business groups and remaining technology teams in May 2023. In certain regions, it may take through the end of 2023 or longer to complete these layoffs. In connection with these layoffs, we expect to incur total pre-tax severance and related personnel costs of approximately $1 billion across the FoA and RL segments. We began recording these restructuring charges in the first quarter of 2023 and expect that the remaining charges will be substantially recognized by the end of 2023 in accordance with the Accounting Standards Codification (ASC) Topic 420, Exit or Disposal Cost Obligations.

A summary of our 2023 Restructuring pre-tax charges recorded for severance and related personnel costs in the three months ended March 31, 2023 is as follows (in millions):


	Three Months Ended March 31, 2023
Research and development	$	324
Marketing and sales	5
General and administrative	194
Total (1)	$	523

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(1) Total severance and related personnel costs include $61 million of share-based compensation expense recognized for the 2023 layoffs.

Total restructuring charges recorded under our FoA segment were $468 million and RL segment were $55 million for the three months ended March 31, 2023.

The following is a summary of changes in the accrued severance and other personnel liabilities related to 2023 layoff activities, included within accrued expenses and other current liabilities on the condensed consolidated balance sheets (in millions):


	Severance Liabilities
Balance as of January 1, 2023	$	—
Severance and other personnel costs	462
Cash payments	(9)
Balance as of March 31, 2023	$	453

We expect the liabilities as of March 31, 2023 to be substantially paid out in cash by the end of third quarter of 2023.

2022 Restructuring

In 2022, we initiated several measures to pursue greater efficiency and to realign our business and strategic priorities. This includes a facilities consolidation strategy to sublease, early terminate, or abandon several office buildings under operating leases, a layoff of approximately 11,000 employees across the FoA and RL segments, and a pivot towards a next generation data center design, including cancellation of multiple data center projects (the “2022 Restructuring”). As of March 31, 2023, we have substantially completed the 2022 employee layoff while continuing to assess facilities consolidation and data center restructuring initiatives. The 2022 Restructuring charges recorded to date were $5.23 billion, with $4.56 billion in FoA and the remainder in RL.

A summary of our 2022 Restructuring pre-tax charges, including subsequent adjustments, is as follows (in millions):


	2022								Three Months Ended March 31, 2023								Plan to Date
	Facilities Consolidation		Severance and Other Personnel Costs		Data Center Assets		Total		Facilities Consolidation		Severance and Other Personnel Costs		Data Center Assets (1)		Total		Total
Cost of revenue	$	154	$	—	$	1,341	$	1,495	$	58	$	—	$	(168)	$	(110)	$	1,385
Research and development	1,311		408		—		1,719		484		(4)		—		480		2,199
Marketing and sales	404		234		—		638		136		(2)		—		134		772
General and administrative	426		333		—		759		129		(12)		—		117		876
Total	$	2,295	$	975	$	1,341	$	4,611	$	807	$	(18)	$	(168)	$	621	$	5,232

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(1)Relates to a change in estimates in our data center restructuring charges recorded during the three months ended December 31, 2022.

The following is a summary of changes in the severance and other personnel liabilities related to the 2022 layoff activities, included within accrued expenses and other current liabilities on the condensed consolidated balance sheets (in millions):


	Severance Liabilities
Balance as of January 1, 2022	$	—
Severance and other personnel costs	975
Cash payments	(203)
Balance as of December 31, 2022	772
Adjustments and foreign exchange	(27)
Cash payments	(675)
Balance as of March 31, 2023	$	70