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Google Q4 2012 Quarterly Earnings Summary
 

Google Q4 2012 Quarterly Earnings Summary

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Google Q4 2012 Quarterly Earnings Summary

Google Q4 2012 Quarterly Earnings Summary

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    Google Q4 2012 Quarterly Earnings Summary Google Q4 2012 Quarterly Earnings Summary Presentation Transcript

    • Q4 2012Quarterly Earnings Summary
    • Fourth Quarter 2012 Highlights Please note: Results from Motorola Home are presented as net loss from discontinued operations on the consolidated statements of income, and are excluded from all other results unless otherwise noted. Previously reported quarters have been adjusted to conform with current period presentation.• Consolidated revenues growth of 36% Y/Y and 8% Q/Q. Including Home, consolidated revenues growth would have been 44% Y/Y and 8% Q/Q. – Consolidated revenues were $14.4 billion. Including Home, consolidated revenues would have been $15.2 billion. • Google revenues (advertising and other) were $12.9 billion – Google properties revenues increased 18% Y/Y and 12% Q/Q – Network revenues increased 19% Y/Y and 10% Q/Q – Other revenues increased 102% Y/Y and 24% Q/Q • Motorola Mobile revenues (hardware and other) were $1.5 billion. – Consolidated international revenues (excluding Home) were $7.7 billion• Operational Highlights – Strong financial metrics: revenue growth and cash flow – Continuing to invest in three major areas of focus: • Core ads: Search and Display advertising • Businesses demonstrating high consumer success: YouTube, Android, Chrome2 • New businesses where we’re investing to drive adoption and innovation: Social, Enterprise, Commerce, Local
    • Consolidated Quarterly Revenues $15,000 14,419 $14,000 Q4’12 Y/Y Growth = 36% 13,304 1,514 $13,000 Q4’12 Q/Q Growth = 8% 11,807 1,778 $12,000 843 3,436 $11,000 10,584 10,645 $10,000 9,720 3,133 ($ in millions) 9,026 2,983 $9,000 8,575 2,880 2,913 8,440 2,595 $8,000 7,286 2,484 6,775 6,820 2,495 2,427 $7,000 $6,000 2,199 2,036 2,063 $5,000 8,640 7,727 $4,000 7,294 7,312 7,542 6,740 5,879 6,232 $3,000 5,672 4,439 4,499 4,833 $2,000 $1,000 385 410 420 439 666 829 $0 300 258 254 273 269 310 Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 Other Google.com Network Motorola Mobile3
    • U.S. vs. International Revenues – Consolidated ($ in millions) 6,775 6,820 7,286 8,440 8,575 9,026 9,720 10,584 10,645 11,807 13,304 14,419 100% 90% 80% 53% 52% 52% 52% 53% 54% 53% 54% 54% 51% 53% 55% 70% 60% 50% 40% 30% 47% 48% 48% 48% 47% 46% 47% 46% 46% 49% 47% 45% 20% 10% 0% Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 US International4
    • Traffic Acquisition Costs $3,000 30% $2,500 26.4% 26.4% 25.7% 25.5% 25.3% 25.5% $2,000 25% 24.5% 24.5% 24.7% 24.2% 24.1% ($ in millions) 23.7% $1,500 3,076 2,770 2,600 2,453 2,510 2,210 2,069 2,038 2,110 $1,000 20% 1,732 1,805 1,711 $500 $0 15% Q110 Q210 Q310 Q410 Q111 Q211 Q311 Q411 Q112 Q212 Q312 Q412 TAC TAC as % of Advertising Revenues5
    • Consolidated Costs and Expenses GAAP ($ in millions) Q411 Q312 Q412 Cost of Revenues $3,702 $5,955 $6,213 Percent of revenues 35% 45% 43% Research & Development $1,298 $1,879 $1,935 Percent of revenues 12% 14% 13% Sales & Marketing $1,268 $1,710 $1,751 Percent of revenues 12% 13% 12% General & Administrative $809 $1,020 $1,126 Percent of revenues 8% 8% 8% Total Costs & Expenses $7,077 $10,564 $11,025 Percent of revenues 67% 79% 76% Non-GAAP ($ in millions) Q411 Q312 Q412 Cost of Revenues $3,625 $5,768 $6,042 Percent of revenues 34% 43% 42% Research & Development $1,032 $1,416 $1,487 Percent of revenues 10% 11% 10% Sales & Marketing $1,163 $1,479 $1,611 Percent of revenues 11% 11% 11% General & Administrative $721 $882 $1,007 Percent of revenues 7% 7% 7% Total Costs & Expenses $6,541 $9,545 $10,147 Percent of revenues 62% 72% 70% Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and expenses to GAAP costs and expenses6
    • Profitability Consolidated GAAP ($ in millions except per share amounts) Q411 Q312 Q412 Income from Operations $ 3,507 $ 2,740 $ 3,394 Operating Margin 33% 21% 24% Net Income from continuing operations $ 2,158 $ 2,907 Net Income (loss) from discontinued operations $ 18 $ (21) Net Income $ 2,705 $ 2,176 $ 2,886 EPS (diluted) - continuing operations $ 6.48 $ 8.68 EPS (diluted) - discontinued operations $ 0.05 $ (0.06) EPS (diluted) $ 8.22 $ 6.53 $ 8.62 Non-GAAP Q412 ($ in millions except per share amounts) Q411 Q312 Q412 (With Home) Income from Operations $ 4,043 $ 3,759 $ 4,272 $ 4,307 Operating Margin 38% 28% 30% Net Income $ 3,127 $ 2,955 $ 3,568 EPS (diluted) $ 9.50 $ 8.87 $ 10.65 Note: Please refer to supporting Table 2 for reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures7
    • Profitability (Cont’d) Google GAAP ($ in millions) Q312 Q412 Income from Operations $ 3,263 $ 3,747 Google Operating Margin 28% 29% Non-GAAP ($ in millions) Q312 Q412 Income from Operations $ 3,951 $ 4,424 Google Operating Margin 34% 34% Motorola Mobile GAAP ($ in millions) Q312 Q412 Loss from Operations $ (523) $ (353) Motorola Mobile Operating Margin -29% -23% Non-GAAP ($ in millions) Q312 Q412 Loss from Operations $ (192) $ (152) Motorola Mobile Operating Margin -11% -10% Note: Please refer to supporting Table 2 for reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures8
    • Consolidated Free Cash Flow (including Motorola Home) ($ in millions) Q411 Q312 Q412 Net cash provided by operating activities $3,924 $4,004 $4,669 Less purchases of property and equipment ($951) ($872) ($1,020) Free cash flow (non-GAAP) $2,973 $3,132 $3,6499
    • Overview of Q4 2012 OI&E and FX • In Interest and Other Income, Net, we recognized net income of $152M for Q4 • In Q4, we recognized $179M of interest income earned on our investments and $71M in net realized gains. • We expensed $77M related to our FX cash flow hedging program. • Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the third quarter of 2012 through the fourth quarter of 2012, our Google business revenues in the fourth quarter of 2012 would have been $130M lower. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2011 through the fourth quarter of 2012, our Google business revenues in the fourth quarter of 2012 would have been $193M higher. • In addition, our FX cash flow hedging program allowed us to recognize a benefit of approximately $37M to Google business international revenue this quarter.10
    • Google Business – Revenues by Geography ($ in millions) Q411 Q312 Q412 United States $4,980 $ 5,416 $ 5,992 United Kingdom 1,064 1,216 1,305 Rest of the world 4,540 4,894 5,608 Total Revenues $10,584 $ 11,526 $ 12,90511
    • Google Business - International Revenues Excluding Hedging and FX Impact (Y/Y) ($ in millions) Q411 Q412 ($ in millions) Q311 Q312 UK revenues (GAAP) $1,064 $1,305 UK revenues (GAAP) $1,047 $1,216 exclude: exclude: a) f/x impact on Q412 revenues using Q411 rates (gains)/losses n/a (16) a) f/x impact on Q312 revenues using Q311 rates (gains)/losses n/a 47 b) hedging gains (6) (1) b) hedging gains - (6) UK revenues excluding f/x and hedging impact (Non-GAAP) $1,058 $1,288 UK revenues excluding f/x and hedging impact (Non-GAAP) $1,047 $1,257 Y/Y % (Non-GAAP) 22% Y/Y % (Non-GAAP) 20% ($ in millions) Q411 Q412 ($ in millions) Q311 Q312 ROW revenues (GAAP) $4,540 $5,608 ROW revenues (GAAP) $4,253 $4,894 exclude: exclude: a) f/x impact on Q412 revenues using Q411 rates (gains)/losses n/a 209 a) f/x impact on Q312 revenues using Q311 rates (gains)/losses n/a 510 b) hedging gains (19) (36) b) hedging gains (1) (56) ROW revenues excluding f/x and hedging impact (Non-GAAP) $4,521 $5,781 ROW revenues excluding f/x and hedging impact (Non-GAAP) $4,252 $5,348 Y/Y % (Non-GAAP) 28% Y/Y % (Non-GAAP) 26%12
    • Google Business - International Revenues Excluding Hedging and FX Impact (Q/Q) ($ in millions) Q312 Q412 ($ in millions) Q212 Q312 UK revenues (GAAP) $1,216 $1,305 UK revenues (GAAP) $1,175 $1,216 exclude: exclude: a) f/x impact on Q412 revenues using Q312 rates (gains)/losses n/a (27) a) f/x impact on Q312 revenues using Q212 rates (gains)/losses n/a 17 b) hedging gains (6) (1) b) hedging gains (7) (6) UK revenues excluding f/x and hedging impact (Non-GAAP) $1,210 $1,277 UK revenues excluding f/x and hedging impact (Non-GAAP) $1,168 $1,227 Q/Q % (Non-GAAP) 6% Q/Q % (Non-GAAP) 5% ($ in millions) Q312 Q412 ($ in millions) Q212 Q312 ROW revenues (GAAP) $4,894 $5,608 ROW revenues (GAAP) $4,784 $4,894 exclude: exclude: a) f/x impact on Q412 revenues using Q312 rates (gains)/losses n/a (103) a) f/x impact on Q312 revenues using Q212 rates (gains)/losses n/a 119 b) hedging gains (56) (36) b) hedging gains (74) (56) ROW revenues excluding f/x and hedging impact (Non-GAAP) $4,838 $5,469 ROW revenues excluding f/x and hedging impact (Non-GAAP) $4,710 $4,957 Q/Q % (Non-GAAP) 13% Q/Q % (Non-GAAP) 5%13
    • Table 1 - Reconciliations of consolidated non-GAAP costs and expenses to GAAP costs and expenses As a % of As a % of As a % of ($ in millions) Q411 Revenues (1) Q312 Revenues (1) Q412 Revenues (1) Cost of revenues - (GAAP) $ 3,702 35% $ 5,955 45% $ 6,213 43% Less: non-GAAP adjustments (2) (77) (187) (171) Cost of revenues - (non-GAAP) $ 3,625 34% $ 5,768 43% $ 6,042 42% Research and development - (GAAP) $ 1,298 12% $ 1,879 14% $ 1,935 13% Less: non-GAAP adjustments (2) (266) (463) (448) Research and development (non-GAAP) $ 1,032 10% $ 1,416 11% $ 1,487 10% Sales and marketing - (GAAP) $ 1,268 12% $ 1,710 13% $ 1,751 12% Less: non-GAAP adjustments (2) (105) (231) (140) Sales and marketing (non-GAAP) $ 1,163 11% $ 1,479 11% $ 1,611 11% General and administrative - (GAAP) $ 809 8% $ 1,020 8% $ 1,126 8% Less: non-GAAP adjustments (2) (88) (138) (119) General and administrative (non-GAAP) $ 721 7% $ 882 7% $ 1,007 7% Total costs and expenses (GAAP) $ 7,077 67% $ 10,564 79% $ 11,025 76% Less: non-GAAP adjustments (2) (536) (1,019) (878) Total costs and expenses (non-GAAP) $ 6,541 62% $ 9,545 72% $ 10,147 70% (1) Percentages based on consolidated revenues of $10,584 million in Q411, $13,304 million in Q312 and $14,419 million in Q412. (2) Pertains to stock-based compensation expense and Motorola Mobile restructuring and related charges in 2012.14
    • Table 2 - Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures Consolidated Operating Operating Operating (In millions except per share amounts) Q411 Margin (1) Q312 Margin (1) Q412 Margin (1) Income from operations (GAAP) $ 3,507 33% $ 2,740 21% $ 3,394 24% Add: Stock-based compensation expense 536 706 700 Add: Motorola Mobile restructuring and related charges 313 178 Income from operations (non-GAAP) $ 4,043 38% $ 3,759 28% $ 4,272 30% Add: Impact from Motorola Home 35 Income from operations with Home (non-GAAP) $ 4,307 Net income (GAAP) $ 2,705 $ 2,176 $ 2,886 Add: Stock-based compensation expense (net of tax) (2) 422 554 548 Add: Motorola Mobile restructuring and related charges net of tax (3) 243 113 Minus: Net income (loss) from discontinued operations (18) 21 Net income (non-GAAP) $ 3,127 $ 2,955 $ 3,568 Net income per share - diluted (GAAP) $ 8.22 $ 6.53 $ 8.62 Net income per share - diluted (non-GAAP) $ 9.50 $ 8.87 $ 10.65 Shares used in per share calculation - diluted 329 333 335 (1) Percentages based on consolidated revenues of $10,584 million in Q411, $13,304 million in Q312 and $14,419 million in Q412. (2) The tax effect of SBC is calculated using the tax-deductible portion of SBC and applying the entity-specific tax rates. (3) The tax effect of other special items is calculated using the entity-specific tax rates.15
    • Table 2 - Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures (cont’d) Google Operating Operating ($ in millions) Q312 Margin (1) Q412 Margin (1) Income from operations (GAAP) $ 3,263 28% $ 3,747 29% Add: Stock-based compensation expense 688 677 Income from operations (non-GAAP) $ 3,951 34% $ 4,424 34% (1) Percentages based on Google revenues of $11,526 million in Q312 and $12,905 million in Q412. Motorola Mobile Operating Operating ($ in millions) Q312 Margin (2) Q412 Margin (2) Loss from operations (GAAP) $ (523) -29% $ (353) -23% Add: Stock-based compensation expense 18 23 Add: Motorola Mobile restructuring and related charges 313 178 Income from operations (non-GAAP) $ (192) -11% $ (152) -10% (2) Percentages based on Motorola Mobile revenues of $1,778 million in Q312 and $1,514 million in Q412.16
    • Q4 2012Quarterly Earnings Summary