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2007Q3_google_earnings_slides
2007Q3_google_earnings_slides
2007Q3_google_earnings_slides
2007Q3_google_earnings_slides
2007Q3_google_earnings_slides
2007Q3_google_earnings_slides
2007Q3_google_earnings_slides
2007Q3_google_earnings_slides
2007Q3_google_earnings_slides
2007Q3_google_earnings_slides
2007Q3_google_earnings_slides
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2007Q3_google_earnings_slides

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  • 1. Q3 2007 Quarterly Earnings Summary
  • 2. Third Quarter 2007 Highlights • Revenue growth of 57% Y/Y and 9% Q/Q – Google properties revenue growth of 68% Y/Y and 10% Q/Q, driven by strength in traffic and monetization – Network revenues increased 40% Y/Y and 8% Q/Q, driven by strength in AdSense for Content and AdSense for Search – Growth in international markets continued to be strong, with $2+ billion in Q3 international revenue • Executing on Search.Ads.Apps Strategy – Continued enhancements to search quality, particularly internationally – Ads quality remains strong – Expanded product offerings with addition of presentations to Google Apps and the closing of Postini in September • Continuing to grow global infrastructure and enhance talent base 2
  • 3. Quarterly Revenue 4,231 3,872 Q3’07 Y/Y Growth = 57% 3,664 Q3’07 Q/Q Growth = 9% $4,000 3,205 $3,500 1,455 $ in millions 1,352 2,690 $3,000 1,345 m 2,456 1,198 2,254 $2,500 1,919 1,037 $2,000 997 1,578 1 578 928 1,384 1,257 $1,500 799 2,735 2,486 675 2,282 630 $1,000 1,977 584 1,626 1 626 1,432 1,297 1,098 $500 885 737 657 $0 Q1 05 Q1'05 Q2 05 Q2'05 Q3 05 Q3'05 Q4 05 Q4'05 Q1 06 Q1'06 Q2 06 Q2'06 Q3 06 Q3'06 Q4 06 Q4'06 Q1 07 Q1'07 Q2 07 Q2'07 Q3 07 Q3'07 Google.com Network Licensing and Other 3
  • 4. U.S. vs. U S vs International Revenue 3,872 4,231 $4,000 3,664 $3,500 48% 3,205 48% $ in millions 47% $3,000 2,690 m 44% 2,456 $2,500 2,254 44% 42% 1,919 $2,000 42% 1,578 1 578 38% 1,384 $1,500 1,257 39% 39% 39% $1,000 $500 52% 53% 56% 52% 58% 58% 56% 61% 62% 61% 61% $0 Q1 05 Q1'05 Q2 05 Q2'05 Q3 05 Q3'05 Q4 05 Q4'05 Q1 06 Q1'06 Q2 06 Q2'06 Q3 06 Q3'06 Q4 06 Q4'06 Q1 07 Q1'07 Q2 07 Q2'07 Q3 07 Q3'07 US International 4
  • 5. Traffic Acquisition Costs 1,221 $1,200 1,125 1,148 40% 37.2% 36.1% $1,100 $1 100 976 34.0% $1,000 35% 33.2% 32.5% 32.3% $900 825 785 $800 30% 31.0% 30.7% 31.0% 723 29.9% 29.1% $ in millions $700 629 $600 25% 530 494 n 462 $500 $400 20% $300 $200 $ 15% $100 $0 10% Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 TAC TAC as % of Advertising Revenues 5
  • 6. Costs and Expenses GAAP $Millions Q3'06 Q2'07 Q3'07 Cost of Revenues $1,049 $1,560 $1,663 Percent of revenues 39% 40% 39% Research & Development $312 $532 $549 Percent of revenues 12% 14% 13% Sales & Marketing $207 $356 $381 Percent of revenues 7% 9% 9% General & Administrative $190 $319 $321 Percent of revenues 7% 8% 8% Total Costs & Expenses $1,758 $2,767 $2,914 Percent of revenues 65% 71% 69% Non-GAAP Non GAAP $Millions Q3'06 Q2'07 Q3'07 Cost of Revenues $1,047 $1,553 $1,659 Percent of revenues 39% 40% 39% Research & Development $251 $375 $418 Percent of revenues 9% 10% 10% Sales & Marketing $192 $319 $351 Percent of revenues 7% 8% 8% General & Administrative $169 $279 $288 Percent of revenues 7% 7% 7% Total Costs & Expenses $1,659 $2,526 $2,716 Percent of revenues 62% 65% 64% Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and expenses to GAAP costs and expenses 6
  • 7. Profitability GAAP $Millions Q3'06 Q2'07 Q3'07 Income from Operations $931 $1,105 $1,318 Operating Margin 35% 29% 31% Net Income $ $733 $ $925 $, $1,070 EPS (diluted) $2.36 $2.93 $3.38 Non-GAAP $Millions $Milli Q3'06 Q2'07 Q3'07 Income from Operations $1,031 $1,346 $1,516 Operating Margin 38% 35% 36% Net Income $812 $1,124 $1,237 EPS (diluted) $2.62 $3.56 $3.91 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. Free Cash Flow $Millions Q3'06 Q2'07 Q3'07 Net cash provided by operating activities $1,004 $1,230 $1,633 Less purchases of property and equipment qp ($ ($492) ) ($ ($575) ) ($ ($553) ) Free cash flow (Non-GAAP) $512 $655 $1,080 8
  • 9. Table 1 - Reconciliations of non-GAAP costs and expenses to GAAP costs and expenses As a % of As a % of As a % of Revenues (1) Revenues (1) Revenues (1) $Millions Q3'06 Q2'07 Q3'07 Cost of Revenues (GAAP) $ 1,049 39% $ 1,560 40% $ 1,663 39% Less: Stock-based compensation (2) - $ (8) - (4) - Cost of Revenues (non-GAAP) $ 1,047 39% $ 1,552 40% $ 1,659 39% Research and development (GAAP) $ 312 12% $ 532 14% $ 549 13% Less: Stock-based compensation (62) - $ (157) - (131) - Research and development (non-GAAP) $ 250 9% $ 375 10% $ 418 10% Sales and marketing (GAAP) $ 207 7% $ 356 9% $ 381 9% Less: Stock-based compensation (15) - $ (36) - (30) - Sales and marketing (non-GAAP) $ 192 7% $ 320 8% $ 351 8% General and administrative (GAAP) $ 190 7% $ 319 8% $ 321 8% Less: Stock-based compensation (21) - $ (40) - (33) - General and administrative (non-GAAP) $ 169 7% $ 279 7% $ 288 7% Total costs and expenses (GAAP) $ 1,758 65% $ 2,767 71% $ 2,914 69% Less: Stock-based compensation (100) - $ (241) - (198) - Total costs and expenses (non-GAAP) $ 1,658 62% $ 2,526 65% $ 2,716 64% (1) Percentages based on GAAP revenues of $2,690 million in Q3 '06, $3,872 million in Q2 '07 and $4,231 million in Q3 '07 9
  • 10. Table 2 - Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures Operating Operating Operating Margin Margin Margin (1) (1) (1) Figures in millions except per share amounts Q3'06 Q2'07 Q3'07 Income from operations (GAAP) $ 931 35% $ 1,105 29% $ 1,318 31% Add: Stock-based compensation 100 - 242 198 Income from operations (non-GAAP) $ 1,031 1 031 38% $ 1,347 1 347 35% $ 1,516 1 516 36% Net income (GAAP) $ 733 $ 925 $ 1,070 Add: Stock-based compensation (net of tax) 79 199 167 Net income (non-GAAP) $ 812 $ 1,124 $ 1,237 Net income per share - diluted (GAAP) $2.36 $2.93 $3.38 Net income per share - diluted (non-GAAP) (non GAAP) $2.62 $2 62 $3.56 $3 56 $3.91 $3 91 Shares used in per share calculation - diluted 311 315 317 (1) Percentages based on GAAP revenues of $2,690 million in Q3 '06, $3,872 million in Q2 '07 and $4,231 million in Q3 '07 10
  • 11. Q3 2007 Quarterly Earnings Summary

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