2008Q1_google_earnings_slides

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2008Q1_google_earnings_slides

  1. 1. Q1 2008 Quarterly Earnings Summary
  2. 2. First Quarter 2008 Highlights • Revenue growth of 42% Y/Y and 7% Q/Q – Google properties revenue growth of 49% Y/Y and 9% Q/Q – Network revenues increased 25% Y/Y and 3% Q/Q – Growth in international markets continued to be strong, with $2.7 billion in Q1 international revenue • Operational Highlights – Improvements in search quality remain key focus – Continued ads quality initiatives to show users better, more relevant ads – Increasing value for advertisers and publishers with broader and deeper solutions • A i iti of D bl Cli k gives G Acquisition f DoubleClick i Google th l di di l ad platform l the leading display d l tf – Strong Apps traction and addition of functionality to Google Apps suite of products • Exercising operational discipline while investing in long-term gp p g g opportunities 2
  3. 3. Quarterly Revenue $5,500 5,186 Q1’08 Y/Y Growth = 42% Q1’08 Q/Q Growth = 7% 4,827 , $5,000 , $4,500 4,231 1,686 3,872 $4,000 1,636 3,664 $3,500 1,455 3,205 $ in millions 1,352 $3,000 1,345 2,690 2,456 1,198 $2,500 2,254 1,919 1,037 $2,000 997 1,578 928 3,400 1,257 1,384 3,122 $1,500 799 2,735 2,486 675 2,282 , 630 $1,000 $ 1,977 584 1,432 1,626 1,297 1,098 $500 885 737 657 $0 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Google.com Network Licensing and Other 3
  4. 4. U.S. vs. U S vs International Revenue $5,500 5,186 4,827 $5,000 $5 000 $4,500 4,231 3,872 $4,000 3,664 48% 51% $3,500 3,205 48% 48% $ in millions 47% $3,000 2,690 44% 2,456 $2,500 2,254 2 254 n 44% 1,919 42% 42% $2,000 1,578 1,384 38% $1,500 1,257 39% 49% 39% 39% 52% 52% 53% 52% $1,000 $1 000 58% 56% 56% 62% 58% 61% 61% $500 61% $0 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q1'05 Q2'05 Q3'05 Q4'05 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 US International 4
  5. 5. Traffic Acquisition Costs 1,440 1,486 $1,500 40% 37.2% $, $1,400 36.1% $1,300 1,221 34.0% 35% 33.2% 1,125 1,148 32.5%32.3% $1,200 $1,100 976 $1,000 30% 31.0% 31 0% 30.7%31 0% 31.0% 29.9% 29.1%30.3% 29.2% $900 825 $ in millions 785 $800 723 25% $700 629 $600 n 494 530 462 $500 20% $400 $300 15% $200 $100 $0 10% 05 05 05 05 06 06 06 06 07 07 07 07 08 1' 2' 3' 4' 1' 2' 3' 4' 1' 2' 3' 4' 1' Q Q Q Q Q Q Q Q Q Q Q Q Q TAC TAC as % of Advertising Revenues 5
  6. 6. Costs and Expenses GAAP $Millions Q1'07 Q4'07 Q1'08 Cost of Revenues $1,470 , $1,956 , $2,111 , 41% Percent of revenues 40% 41% Research & Development $408 $631 $673 13% Percent of revenues 11% 13% Sales & Marketing $303 $422 $447 9% Percent of revenues 7% 9% General & Administrative $261 $377 $409 8% Percent of revenues 7% 7% Total Costs & Expenses $2,443 $3,386 $3,640 Percent of revenues 67% 71% 70% Non-GAAP $Millions Q1'07 Q4'07 Q1'08 Cost of Revenues $1,466 $1,950 $2,102 40% Percent of revenues 40% 41% Research & Development $288 $470 $479 10% Percent of revenues 8% 9% Sales & Marketing $275 $384 $404 8% Percent of revenues 8% 8% General & Administrative $230 $337 $374 7% Percent of revenues 6% 7% Total Costs & Expenses $2,259 $3,141 $3,359 65% Percent of revenues 62% 65% 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 Q1 07 Q1'07 Q4 07 Q4'07 Q1 08 Q1'08 Income from Operations $1,221 $1,441 $1,546 Operating Margin 33% 30% 30% Net Income $1,002 $1 002 $1,206 $1 206 $1,307 $1 307 EPS (diluted) $3.18 $3.79 $4.12 Non-GAAP $Millions Q1'07 Q4'07 Q1'08 Income from Operations $1,405 $1,686 $1,827 Operating Margin 35% 38% 35% Net Income $1,159 $1,409 $1,537 EPS (diluted) $3.68 $4.43 $4.84 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 Q1'07 Q4'07 Q1'08 Net cash provided by operating activities $1,220 $1,693 $1,780 Less purchases of property and equipment qp ($ ($597) ) ($ ($678) ) ($ ($842) ) Free cash flow (Non-GAAP) $623 $1,015 $938 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 Revenues (1) Revenues (1) Revenues (1) $Millions Q1'07 Q4'07 Q1'08 Cost of Revenues (GAAP) $ 1,470 1 470 40% $ 1,956 1 956 41% $ 2,111 2 111 41% Less: Stock-based compensation (4) (6) (9) Cost of Revenues (non-GAAP) $ 1,466 40% $ 1,950 40% $ 2,102 41% - Research and development (GAAP) $ 408 11% $ 631 13% $ 673 13% Less: Stock-based compensation (121) (161) (194) Research and development (non-GAAP) R h dd l t( GAAP) $ 288 8% $ 470 10% $ 479 9% - Sales and marketing (GAAP) $ 303 8% $ 422 9% $ 447 9% Less: Stock-based compensation (27) (38) (43) Sales and marketing (non-GAAP) $ 275 8% $ 384 8% $ 404 8% - General and administrati e (GAAP) administrative $ 261 7% $ 377 8% $ 409 7% Less: Stock-based compensation (31) (40) (35) General and administrative (non-GAAP) $ 230 6% $ 337 7% $ 374 7% Total costs and expenses (GAAP) $ 2,443 67% $ 3,386 71% $ 3,640 70% Less: Stock-based compensation (184) (245) (281) Total T t l costs and expenses (non-GAAP) t d ( GAAP) $ 2,259 62% $ 3,141 65% $ 3,359 65% (1) Percentages based on GAAP revenues of $3,664 million in Q1 '07, $4,827 million in Q4 '07 and $5,186 million in Q1 '08. 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 (1) (1) (1) Figures in millions except per share amounts Q1'07 Q4'07 Q1'08 Income from operations (GAAP) $ 1,221 33% $ 1,441 30% $ 1,546 30% Add: Stock-based compensation 184 245 281 Income from operations (non-GAAP) $ 1,405 38% $ 1,686 35% $ 1,827 35% Net income (GAAP) ( ) $ 1,002 , $ 1,206 , $ 1,307 , Add: Stock-based compensation (net of tax) 157 203 230 Net income (non-GAAP) $ 1,159 $ 1,409 $ 1,537 Net income per share - diluted (GAAP) $3.18 $3.79 $4.12 Net income per share - diluted (non-GAAP) $3.68 $4.43 $4.84 Shares used in per share calculation - diluted p 315 318 317 (1) Percentages based on GAAP revenues of $3,664 million in Q1 '07, $4,827 million in Q4 '07 and $5,186 million in Q1 '08. 10
  11. 11. Q1 2008 Quarterly Earnings Summary

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