Q2 2009
Quarterly Earnings
    Summary
Second Quarter 2009 Highlights

    • Revenue growth of 3% Y/Y
      –   Google properties revenue growth of 3% Y/Y and -1...
Quarterly Revenues
                                                                                           Q2’09 Y/Y Gr...
U.S. vs.
    U S vs International Revenues
                                    ($ in millions)
              5,186   5,367...
Traffic Acquisition Costs

                     $1,500                                                                   4...
Costs and Expenses
          GAAP
          $Millions                                  Q2'08           Q1'09            Q2...
Profitability

       GAAP
       $Millions (except per share amounts)
       $Milli    (     t      h         t )        ...
Free Cash Flow



          $Millions                    Q2'08     Q1'09     Q2'09
          Net cash provided by
        ...
Table 1 - Reconciliations of non-GAAP costs and expenses
     to GAAP costs and expenses
                                 ...
Table 2 - Reconciliations of non-GAAP results of operations
         measures to the nearest comparable GAAP measures



 ...
Q2 2009
Quarterly Earnings
    Summary
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Google Earnings Slides 2009 Q2

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Google Earnings Slides 2009 Q2

  1. 1. Q2 2009 Quarterly Earnings Summary
  2. 2. Second Quarter 2009 Highlights • Revenue growth of 3% Y/Y – Google properties revenue growth of 3% Y/Y and -1% Q/Q – Network revenues increased 2% Y/Y and 3% Q/Q – International revenues were $2 9 billion $2.9 • Operational Highlights – Traffic and revenues solid in Q2 despite difficult economic environment – Key investments continue in our core search and ads businesses – Continuing to invest in strategic growth areas: • Display, Apps, and Mobile • Maintaining a clear focus on operational efficiency and continued cost management 2
  3. 3. Quarterly Revenues Q2’09 Y/Y Growth = 3% Q2’09 Q/Q Growth = 0% $6,000 5,541 5 541 5,701 5,367 5,509 5,523 $5,500 5,186 $5,000 1,693 $4,500 1,680 1,638 1,684 , 1,655 1 655 1,686 $ in millions $4,000 $3,500 $3,000 $3 000 $2,500 $2,000 3,672 3,811 3,693 3,653 3,400 3,530 $1,500 $1,000 $500 $0 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 3 Google.com Network Licensing and Other
  4. 4. U.S. vs. U S vs International Revenues ($ in millions) 5,186 5,367 5,541 5,701 5,509 5,523 100% 90% 80% 70% 51% 52% 51% 50% 52% 53% 60% 50% 40% 49% 48% 49% 50% 48% 47% 30% 20% 10% 0% Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 US International 4
  5. 5. Traffic Acquisition Costs $1,500 40% $1,400 $1,300 35% $1,200 $1,100 29.2% 29 2% $1,000 28.4% 27.9% 30% 27.2% $ in millions $900 26.9% 26.9% $800 1,486 1,474 1,495 1,483 1,436 1,453 , 25% n $700 $600 $500 20% $400 $300 15% $200 $100 $0 10% Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 TAC TAC as % of Advertising Revenues 5
  6. 6. Costs and Expenses GAAP $Millions Q2'08 Q1'09 Q2'09 Cost of Revenues C f $2,148 $2,101 $2,108 Percent of revenues 40% 38% 38% Research & Development $682 $642 $708 Percent of revenues 13% 12% 13% Sales & Marketing $485 $434 $469 Percent of revenues 9% 8% 8% General & Administrative $474 $448 $364 Percent of revenues 9% 8% 7% Total Costs & Expenses $3,789 $3,625 $3,649 Percent of revenues 71% 66% 66% Non GAAP Non-GAAP $Millions Q2'08 Q1'09 Q2'09 Cost of Revenues $2,139 $2,089 $2,094 Percent of revenues 40% 38% 38% Research & Development $495 $473 $526 Percent of revenues 10% 9% 10% Sales & Marketing $442 $375 $412 Percent of revenues 8% 7% 7% General & Administrative $440 $411 $324 Percent of revenues 8% 7% 6% Total Costs & Expenses $3,516 $3,348 $3,356 Percent of revenues 66% 61% 61% Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and expenses to GAAP costs and expenses 6
  7. 7. Profitability GAAP $Millions (except per share amounts) $Milli ( t h t ) Q2'08 Q1'09 Q2'09 Income from Operations $1,578 $ 1,884 $ 1,874 Operating Margin 29% 34% 34% Net Income N tI $1,247 $ 1,423 $ 1,485 EPS (diluted) $3.92 $ 4.49 $ 4.66 Non-GAAP $Millions (except per share amounts) Q2'08 Q1'09 Q2'09 Income from Operations $1,851 $ 2,161 $ 2,167 Operating Margin 34% 39% 39% Net Income $1,472 $ 1,636 $ 1,708 EPS (diluted) $4.63 $ 5.16 $ 5.36 Note: Please refer to supporting Table 2 for reconciliations of non-GAAP results of operations pp g p measures to the nearest comparable GAAP measures 7
  8. 8. Free Cash Flow $Millions Q2'08 Q1'09 Q2'09 Net cash provided by operating activities $1,766 $2,250 $1,609 Less purchases of property and equipment q p ($ ($697) ) ($ ($263) ) ($ ($139) ) Free cash flow (Non-GAAP) $1,069 $1,987 $1,470 8
  9. 9. Table 1 - Reconciliations of non-GAAP costs and expenses to GAAP costs and expenses As a % of As a % of As a % of $Millions Q2'08 Revenues (1) Q1'09 Revenues (1) Q2'09 Revenues (1) Cost of Revenues (GAAP) $ 2,148 2 148 40% $ 2,101 2 101 38% $ 2,108 2 108 38% Less: Stock-based compensation (9) (12) (14) Cost of Revenues (non-GAAP) $ 2,139 40% $ 2,089 38% $ 2,094 38% Research and development (GAAP) $ 682 13% $ 642 12% $ 708 13% Less: Stock-based compensation (187) (169) (182) Research and development (non GAAP) (non-GAAP) $ 495 10% $ 473 9% $ 526 10% Sales and marketing (GAAP) $ 485 9% $ 434 8% $ 469 8% Less: Stock-based compensation (43) (59) (57) Sales and marketing (non-GAAP) $ 442 8% $ 375 7% $ 412 7% General and administrative (GAAP) $ 474 9% $ 448 8% $ 364 7% Less: Stock-based compensation (34) (37) (40) General and administrative (non-GAAP) $ 440 8% $ 411 7% $ 324 6% Total costs and expenses (GAAP) $ 3,789 71% $ 3,625 66% $ 3,649 66% Less: Stock-based compensation (273) (277) (293) Total T t l costs and expenses (non-GAAP) t d ( GAAP) $ 3,516 3 516 66% $ 3,348 3 348 61% $ 3,356 3 356 61% (1) Percentages based on revenues of $5,367 million in Q2 '08, $5,509 million in Q1 '09 and $5,523 million in Q2 '09. 9
  10. 10. Table 2 - Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures Operating Operating Operating Margin Margin Margin $ millions except per share amounts Q2'08 (1) Q1'09 (1) Q2'09 (1) Income from operations (GAAP) $ 1,578 29% $ 1,884 34% $ 1,874 34% Add: Stock-based compensation Add S k b d i 273 277 293 Income from operations (non-GAAP) $ 1,851 34% $ 2,161 39% $ 2,167 39% Net income (GAAP) $ 1,247 $ 1,423 $ 1,485 Add: Stock-based compensation (net of tax) 225 213 223 Net income (non GAAP) (non-GAAP) $ 1,472 $ 1,636 $ 1,708 Net income per share - diluted (GAAP) $ 3.92 $ 4.49 $ 4.66 Net income per share - diluted (non-GAAP) $ 4.63 $ 5.16 $ 5.36 Shares used in per share calculation - diluted 318 317 319 (1) Percentages based on revenues of $5 367 million in Q2 '08 $5 509 million in Q1 '09 and $5 523 million in Q2 '09 $5,367 08, $5,509 09 $5,523 09. 10
  11. 11. Q2 2009 Quarterly Earnings Summary
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