Q3 2011
Quarterly Earnings
Summary
2
Third Quarter 2011 Highlights
• Revenue growth of 33% Y/Y and 8% Q/Q
– Google properties revenue increased 39% Y/Y and 8...
3
Quarterly Revenues($inmillions)
178 186 188 209 300 258 254 273 269 310 385
3,693 3,653
3,956
4,421 4,439 4,499 4,833
5,...
4
U.S. vs. International Revenues
48% 47% 47% 47% 47% 48% 48% 48% 47% 46% 45%
52% 53% 53% 53% 53% 52% 52% 52% 53% 54% 55%
...
5
1,436 1,453
1,559
1,721 1,711 1,732 1,805
2,069 2,038 2,110
2,210
26.9%
27.2% 27.1%
26.6% 26.4% 26.4%
25.7%
25.3%
24.5%
...
6
Costs and Expenses
Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and
expenses to GAAP c...
7
Profitability
Note: Please refer to supporting Table 2 for reconciliations of non-GAAP results of operations
measures to...
8
Free Cash Flow
($ in millions) Q3'10 Q2'11 Q3'11
Net cash provided by
operating activities $2,886 $3,519 $3,950
Less pur...
9
Overview of Q3 2011 OI&E and FX
In Interest and Other Income, Net, we recognized net income of $302M for Q3
• In Q3, we ...
10
Revenues by Geography
($ in millions) Q3'10 Q2'11 Q3'11
United States $3,517 $4,155 $4,420
United Kingdom $840 $976 $1,...
11
International Revenues Excluding Hedging and FX Impact (Y/Y)
($ in millions) Q3'10 Q3'11 ($ in millions) Q2'10 Q2'11
UK...
12
International Revenues Excluding Hedging and FX Impact (Q/Q)
($ in millions) Q2'11 Q3'11 ($ in millions) Q1'11 Q2'11
UK...
13
Table 1 - Reconciliations of non-GAAP costs and expenses
to GAAP costs and expenses
($ in millions) Q3'10
As a % of
Rev...
14
Table 2 - Reconciliations of non-GAAP results of operations
measures to the nearest comparable GAAP measures
(In millio...
Q3 2011
Quarterly Earnings
Summary
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Google earnings q3 2011

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Google earnings q4 2012
martin engegren

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Google earnings q3 2011

  1. 1. Q3 2011 Quarterly Earnings Summary
  2. 2. 2 Third Quarter 2011 Highlights • Revenue growth of 33% Y/Y and 8% Q/Q – Google properties revenue increased 39% Y/Y and 8% Q/Q – Network revenues increased 18% Y/Y and 4% Q/Q – International revenues were $5.3 billion • Operational Highlights – Strong financial metrics: revenue growth, profitability, cash flow – Continuing to invest in three major areas of focus: • Core ads business: search quality and monetization • Businesses demonstrating high consumer success: YouTube, Android, Chrome • New businesses where we’re investing to drive adoption and innovation: Social, Enterprise, Commerce, Local
  3. 3. 3 Quarterly Revenues($inmillions) 178 186 188 209 300 258 254 273 269 310 385 3,693 3,653 3,956 4,421 4,439 4,499 4,833 5,672 5,879 6,232 6,740 1,638 1,684 1,801 2,044 2,036 2,063 2,199 2,495 2,427 2,484 2,595 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Other Google.com Network Q3’11 Y/Y Growth = 33% Q3’11 Q/Q Growth = 8% 5,509 5,523 5,945 6,674 6,775 6,820 7,286 8,440 8,575 9,026 9,720
  4. 4. 4 U.S. vs. International Revenues 48% 47% 47% 47% 47% 48% 48% 48% 47% 46% 45% 52% 53% 53% 53% 53% 52% 52% 52% 53% 54% 55% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 US International 5,509 5,523 ($ in millions) 6,6745,945 6,775 6,820 7,286 8,440 8,575 9,026 9,720
  5. 5. 5 1,436 1,453 1,559 1,721 1,711 1,732 1,805 2,069 2,038 2,110 2,210 26.9% 27.2% 27.1% 26.6% 26.4% 26.4% 25.7% 25.3% 24.5% 24.2% 23.7% 15% 20% 25% 30% $0 $500 $1,000 $1,500 $2,000 $2,500 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 TAC TAC as % of Advertising Revenues Traffic Acquisition Costs($inmillions)
  6. 6. 6 Costs and Expenses Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and expenses to GAAP costs and expenses GAAP ($ in millions) Q3'10 Q2'11 Q3'11 Cost of Revenues $2,552 $3,172 $3,378 Percent of revenues 35% 35% 35% Research & Development $994 $1,234 $1,404 Percent of revenues 14% 14% 14% Sales & Marketing $661 $1,091 $1,204 Percent of revenues 9% 12% 12% General & Administrative $532 $648 $676 Percent of revenues 7% 7% 7% Total Costs & Expenses $4,739 $6,145 $6,662 Percent of revenues 65% 68% 69% Non-GAAP ($ in millions) Q3'10 Q2'11 Q3'11 Cost of Revenues $2,544 $3,121 $3,306 Percent of revenues 35% 35% 34% Research & Development $750 $987 $1,093 Percent of revenues 10% 11% 11% Sales & Marketing $586 $1,017 $1,100 Percent of revenues 8% 11% 11% General & Administrative $479 $585 $592 Percent of revenues 7% 6% 6% Total Costs & Expenses $4,359 $5,710 $6,091 Percent of revenues 60% 63% 63%
  7. 7. 7 Profitability Note: Please refer to supporting Table 2 for reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures GAAP ($ in millions except per share amounts) Q3'10 Q2'11 Q3'11 Income from Operations $ 2,547 $ 2,881 $ 3,058 Operating Margin 35% 32% 31% Net Income $ 2,167 $ 2,505 $ 2,729 EPS (diluted) $ 6.72 $ 7.68 $ 8.33 Non-GAAP ($ in millions except per share amounts) Q3'10 Q2'11 Q3'11 Income from Operations $ 2,927 $ 3,316 $ 3,629 Operating Margin 40% 37% 37% Net Income $ 2,462 $ 2,849 $ 3,184 EPS (diluted) $ 7.64 $ 8.74 $ 9.72
  8. 8. 8 Free Cash Flow ($ in millions) Q3'10 Q2'11 Q3'11 Net cash provided by operating activities $2,886 $3,519 $3,950 Less purchases of property and equipment ($757) ($917) ($680) Free cash flow (non-GAAP) $2,129 $2,602 $3,270
  9. 9. 9 Overview of Q3 2011 OI&E and FX In Interest and Other Income, Net, we recognized net income of $302M for Q3 • In Q3, we recognized $211M of interest income earned on our investments and $107M in realized gains. • We expensed $18M related to our FX cash flow hedging program. • Excluding gains related to our FX cash flow hedging program, had foreign exchange rates remained constant from Q2 2011 through Q3 2011, our revenue in Q3 2011 would have been $53M lower. Excluding gains related to our FX cash flow hedging program, had foreign exchange rates remained constant from Q3 2010 through Q3 2011, our revenue in Q3 2011 would have been $483M lower. • In addition, our FX cash flow hedging program allowed us to recognize a benefit of approximately $1M to international revenue this quarter.
  10. 10. 10 Revenues by Geography ($ in millions) Q3'10 Q2'11 Q3'11 United States $3,517 $4,155 $4,420 United Kingdom $840 $976 $1,047 Rest of the world $2,929 $3,895 $4,253 Total Revenues $7,286 $9,026 $9,720
  11. 11. 11 International Revenues Excluding Hedging and FX Impact (Y/Y) ($ in millions) Q3'10 Q3'11 ($ in millions) Q2'10 Q2'11 UK revenues (GAAP) $840 $1,047 UK revenues (GAAP) $770 $976 exclude: exclude: a) f/x impact on Q3'11 revenues using Q3'10 rates (gains)/losses n/a (56) a) f/x impact on Q2'11 revenues using Q2'10 rates (gains)/losses n/a (81) b) hedging gains (11) - b) hedging gains (19) - UK revenues excluding f/x and hedging impact (Non- GAAP) $829 $991 UK revenues excluding f/x and hedging impact (Non- GAAP) $751 $895 Y/Y % (Non-GAAP) 20% Y/Y % (Non-GAAP) 19% ($ in millions) Q3'10 Q3'11 ($ in millions) Q2'10 Q2'11 ROW revenues (GAAP) $2,929 $4,253 ROW revenues (GAAP) $2,762 $3,895 exclude: exclude: a) f/x impact on Q3'11 revenues using Q3'10 rates (gains)/losses n/a (427) a) f/x impact on Q2'11 revenues using Q2'10 rates (gains)/losses n/a (336) b) hedging gains (78) (1) b) hedging gains (60) (4) ROW revenues excluding f/x and hedging impact (Non-GAAP) $2,851 $3,825 ROW revenues excluding f/x and hedging impact (Non-GAAP) $2,702 $3,555 Y/Y % (Non-GAAP) 34% Y/Y % (Non-GAAP) 32%
  12. 12. 12 International Revenues Excluding Hedging and FX Impact (Q/Q) ($ in millions) Q2'11 Q3'11 ($ in millions) Q1'11 Q2'11 UK revenues (GAAP) $976 $1,047 UK revenues (GAAP) $969 $976 exclude: exclude: a) f/x impact on Q3'11 revenues using Q2'11 rates (gains)/losses n/a 1 a) f/x impact on Q2'11 revenues using Q1'11 rates (gains)/losses n/a (29) b) hedging gains - - b) hedging gains (4) - UK revenues excluding f/x and hedging impact (Non- GAAP) $976 $1,048 UK revenues excluding f/x and hedging impact (Non- GAAP) $965 $947 Q/Q % (Non-GAAP) 7% Q/Q % (Non-GAAP) -2% ($ in millions) Q2'11 Q3'11 ($ in millions) Q1'11 Q2'11 ROW revenues (GAAP) $3,895 $4,253 ROW revenues (GAAP) $3,601 $3,895 exclude: exclude: a) f/x impact on Q3'11 revenues using Q2'11 rates (gains)/losses n/a (54) a) f/x impact on Q2'11 revenues using Q1'11 rates (gains)/losses n/a (138) b) hedging gains (4) (1) b) hedging gains (10) (4) ROW revenues excluding f/x and hedging impact (Non-GAAP) $3,891 $4,198 ROW revenues excluding f/x and hedging impact (Non-GAAP) $3,591 $3,753 Q/Q % (Non-GAAP) 8% Q/Q % (Non-GAAP) 5%
  13. 13. 13 Table 1 - Reconciliations of non-GAAP costs and expenses to GAAP costs and expenses ($ in millions) Q3'10 As a % of Revenues (1) Q2'11 As a % of Revenues (1) Q3'11 As a % of Revenues (1) Cost of revenues (GAAP) $ 2,552 35% $ 3,172 35% $ 3,378 35% Less: Stock-based compensation expense (8) (51) (72) Cost of revenues (non-GAAP) $ 2,544 35% $ 3,121 35% $ 3,306 34% Research and development (GAAP) $ 994 14% $ 1,234 14% $ 1,404 14% Less: Stock-based compensation expense (244) (247) (311) Research and development (non-GAAP) $ 750 10% $ 987 11% $ 1,093 11% Sales and marketing (GAAP) $ 661 9% $ 1,091 12% $ 1,204 12% Less: Stock-based compensation expense (75) (74) (104) Sales and marketing (non-GAAP) $ 586 8% $ 1,017 11% $ 1,100 11% General and administrative (GAAP) $ 532 7% $ 648 7% $ 676 7% Less: Stock-based compensation expense (53) (63) (84) General and administrative (non-GAAP) $ 479 7% $ 585 6% $ 592 6% Total costs and expenses (GAAP) $ 4,739 65% $ 6,145 68% $ 6,662 69% Less: Stock-based compensation expense (380) (435) (571) Total costs and expenses (non-GAAP) $ 4,359 60% $ 5,710 63% $ 6,091 63% (1) Percentages based on revenues of $7,286 million in Q3'10, $9,026 million in Q2'11 and $9,720 million in Q3'11.
  14. 14. 14 Table 2 - Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures (In millions except per share amounts) Q3'10 Operating Margin (1) Q2'11 Operating Margin (1) Q3'11 Operating Margin (1) Income from operations (GAAP) $ 2,547 35% $ 2,881 32% $ 3,058 31% Add: Stock-based compensation expense 380 435 571 Income from operations (non-GAAP) $ 2,927 40% $ 3,316 37% $ 3,629 37% Net income (GAAP) $ 2,167 $ 2,505 $ 2,729 Add: Stock-based compensation expense (net of tax) 295 344 455 Net income (non-GAAP) $ 2,462 $ 2,849 $ 3,184 Net income per share - diluted (GAAP) $ 6.72 $ 7.68 $ 8.33 Net income per share - diluted (non-GAAP) $ 7.64 $ 8.74 $ 9.72 Shares used in per share calculation - diluted 322 326 327 (1) Percentages based on revenues of $7,286 million in Q3'10, $9,026 million in Q2'11 and $9,720 million in Q3'11.
  15. 15. Q3 2011 Quarterly Earnings Summary
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