Docstoc

google

Document Sample
google Powered By Docstoc
					    Q2 2010
Quarterly Earnings
    Summary
    Second Quarter 2010 Highlights
    • Revenue growth of 24% Y/Y and 1% Q/Q
      –   Google properties revenue i
          G   l        ti                   d           d
                                    increased 23% Y/Y and 1% Q/Q
      –   Network revenues increased 23% Y/Y and decreased 1% Q/Q
      –   International revenues were $3.5 billion


    • Operational Highlights
      –   Strong financial metrics: revenue growth, profitability and cash flow

      –   Continuing to invest in our largest growth opportunities with the highest long-term ROI:

          •    Search Monetization

          •    Display

          •    Mobile

          •    Enterprise




2
    Quarterly Revenues
                                  Q2’10 Y/Y Growth = 24%
                                  Q2’10 Q/Q Growth = 1%                                              6,820
                                                                                         6,674 6,775
                       $7,000

                       $6,500
                                                                                5,945
                                            5,541 5,701 5,509 5,523
                       $6,000
                                                                                                 2,036   2,063
                                                                                         2,044
                       $5,500   5,186 5,367
                       $5,000                                                   1,801
                                                        1,693
     ($ in millions)




                                                1,680           1,638   1,684
                       $4,500           1,655
                                1,686
                       $4,000

                       $3 500
                       $3,500
      $




                       $3,000

                       $2,500                                                            4,421   4,439   4,499
                                                        3,811           3,653    3,956
                       $2,000            ,
                                        3,530   3,672           3,693
                                3,400
                                3 400
                       $1,500

                       $1,000

                        $500

                                 100    182     189     197     178     186      188      209    300     258
                          $0
                                Q1'08   Q2'08   Q3'08   Q4'08   Q1'09   Q2'09   Q3'09    Q4'09   Q1'10   Q2'10


3                                               Other             Google.com               Network
    U.S. vs.
    U S vs International Revenues
                                               ($ in millions)
              5,186 5,367 5,541 5,701 5,509 5,523 5,945 6,674 6,775 6,820
       100%


       90%


       80%
              51%     52%     51%     50%      52%       53%     53%     53%     53%     52%
       70%


       60%


       50%


       40%


       30%
              49%     48%     49%     50%      48%       47%     47%     47%     47%     48%
       20%


       10%


        0%
              Q1'08   Q2'08   Q3'08   Q4'08    Q1'09    Q2'09    Q3'09   Q4'09   Q1'10   Q2'10

                                          US             International
4
    Traffic Acquisition Costs
                       $1,800                                                                                  40%
                       $ ,
                       $1,700
                       $1,600
                       $1,500                                                                                  35%
                       $1,400
                       $1,300
                                29.2%
                                29 2%
                       $1,200           28.4% 27.9%                                                            30%
                       $1,100                          26.9% 26.9% 27.2% 27.1% 26.6% 26.4% 26.4%
     ($ in millions)




                       $1,000
                        $900                                                                                   25%
                                                                                        1,721    1,711 1,732
                        $800                                                   1 559
                                                                               1,559
                                1,486   1,474 1,495    1,483   1,436   1,453
                        $700
                        $600                                                                                   20%
                        $500
                        $
                        $400
                        $300                                                                                   15%
                        $200
                        $100
                          $0                                                                                   10%
                                Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10

                                                      TAC          TAC as % of Advertising Revenues
5
    Costs and Expenses
           GAAP
           (             )
           ($ in millions)                           Q2'09           Q1'10          Q2'10
           Cost of Revenues                              $2,108          $2,452          $2,467
             Percent of revenues                            38%             36%             36%
           Research & Development                          $708            $818            $898
             Percent of revenues                            13%             12%             13%
           Sales & Marketing                               $469            $607            $629
             Percent of revenues                             8%              9%              9%
           General & Administrative                        $364            $410            $461
             Percent of revenues                             7%              6%              7%
           Total Costs & Expenses                        $3,649          $4,287          $4,455
             Percent of revenues                            66%             63%             65%


           Non-GAAP
           ($ in millions)                           Q2'09           Q1'10          Q2'10
           Cost of Revenues                              $2,094          $2,446          $2,459
             Percent of revenues                            38%             36%             36%
           Research & Development                          $526            $627            $696
             Percent of revenues                            10%              9%             10%
           Sales & Marketing                               $412            $553            $573
             Percent of revenues                             7%              8%              8%
           General & Administrative                        $324            $370            $418
             Percent of revenues                             6%              6%              7%
           Total Costs & Expenses                        $3,356          $3,996          $4,146
             Percent of revenues                            61%             59%             61%

            Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and
            expenses to GAAP costs and expenses
6
    Profitability
      GAAP
      ($ in millions except per share amounts)                             Q2'09             Q1'10                Q2'10
      Income from Operations                                           $      1,874      $      2,488         $     2,365
      Operating Margin                                                          34%               37%                35%
      Net Income                                                       $      1,485      $      1,955         $     1,840
      EPS (diluted)                                                    $        4.66     $        6.06        $      5.71


      Non-GAAP
         i   illi         t
      ($ in millions except per share amounts)
                                 h         t )                             Q2'09             Q1'10                Q2'10
      Income from Operations                                           $      2,167      $      2,779         $     2,674
      Operating Margin                                                          39%               41%                39%
      Net Income                                                       $      1,708      $      2,181         $     2,079
      EPS (diluted)                                                    $        5.36     $        6.76        $      6.45

                                     pp     g                                                     p
             Note: Please refer to supporting Table 2 for reconciliations of non-GAAP results of operations
             measures to the nearest comparable GAAP measures



7
    Free Cash Flow



          ($ in millions)              Q2'09     Q1'10     Q2'10
          Net cash provided by
          operating activities          $1,609    $2,584    $2,085

          Less purchases of property
          and equipment
               q p                      ($139)
                                        ($   )    ($239)
                                                  ($   )    ($   )
                                                            ($476)



          Free cash flow (Non-GAAP)     $1,470    $2,345    $1,609




8
      Overview of Q2 2010 OI&E and FX

    In Interest Income and Other (Expense), Net, we recognized net income of
    $69M for Q2

    • In Q2, we recognized $136M of interest income earned on our investments and $43M in
    realized gains.

    • In Q2, a greater portion of our option portfolio was in the money as foreign exchange rates
    moved farther away from the option strike prices in Q2. As a result, we expensed $100M
    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 Q1 2010 through Q2 2010, our revenue in Q2 would have been
    $176M higher. Excluding gains related to our FX cash flow hedging program, had foreign
    exchange rates remained constant from Q2 2009 through Q2 2010, our revenue in Q2 2010
        ld have b
    would h     been $24M l lower.

    • In addition, our FX cash flow hedging program allowed us to recognize a benefit of
    approximately $79M to international revenue this quarter.


9
     Revenues by Geography



           ($ in millions)     Q2'09     Q1'10     Q2'10

           U it d States
           United St t          $2,609    $3,196    $3,288


           United Kingdom        $715      $842      $770


           Rest of the World    $2,199    $2,737    $2,762


            Total Revenues      $5,523    $6,775    $6,820




10
     International Revenues Excluding Hedging and FX Impact (Y/Y)

      ($ in millions)                                       Q2'09 Q2'10     ($ in millions)                                       Q1'09 Q1'10
      UK revenues (GAAP)
                  (    )                                     $715    $770               (    )
                                                                            UK revenues (GAAP)                                     $733    $842
      exclude:                                                              exclude:

        a) f/x impact on Q2'10 revenues using Q2'09 rates                     a) f/x impact on Q1'10 revenues using Q1'09 rates
        (gains)/losses                                         n/a      5     (gains)/losses                                         n/a    (72)
        b) hedging gains                                      (67)   (19)     b) hedging gains                                      (82)    (10)

      UK revenues excluding f/x and hedging impact (Non-                    UK revenues excluding f/x and hedging impact (Non-
      GAAP)                                                  $648    $756   GAAP)                                                  $651    $760

      Y/Y % (Non-GAAP)                                               17%    Y/Y % (Non-GAAP)                                               17%



      ($ in millions)                                       Q2'09 Q2'10     ($ in millions)                                       Q1'09 Q1'10
      ROW revenues (GAAP)                                   $2,199 $2,762   ROW revenues (GAAP)                                   $2,149 $2,737
      exclude:                                                              exclude:

        a) f/x impact on Q2'10 revenues using Q2'09 rates                     a) f/x impact on Q1'10 revenues using Q1'09 rates
        (gains)/losses                                        n/a    (29)     (gains)/losses                                        n/a    (170)
        b) hedging gains                                      (57)   (60)     b) hedging gains                                      (72)    -

      ROW revenues excluding f/x and hedging impact                         ROW revenues excluding f/x and hedging impact
      (Non-GAAP)                                            $2,142 $2,673   (Non-GAAP)                                            $2,077 $2,567

      Y/Y % (Non-GAAP)                                               25%    Y/Y % (Non-GAAP)                                               24%

11
     International Revenues Excluding Hedging and FX Impact (Q/Q)

      ($ in millions)                                       Q1'10 Q2'10     ($ in millions)                                       Q4'09 Q1'10
      UK Revenues (GAAP)                                     $842    $770   UK Revenues (GAAP)                                     $772    $842
      exclude:                                                              exclude:
       a) f/x impact on Q2'10 revenues using Q1'10 rates                     a) f/x impact on Q1'10 revenues using Q4'09 rates
       (gains)/losses                                         n/a     47     (gains)/losses                                         n/a     20
       b) hedging gains                                       (10)   (19)    b) hedging gains                                        (8)   (10)
      UK revenues excluding f/x and hedging impact (Non-                    UK revenues excluding f/x and hedging impact (Non-
      GAAP)                                                  $832    $798   GAAP)                                                  $764    $852

      Q/Q % (Non-GAAP)                                               -4%    Q/Q % (Non-GAAP)                                               12%



      ($ in millions)                                       Q1'10 Q2'10     ($ in millions)                                       Q4'09 Q1'10
      ROW Revenues (GAAP)                                   $2,737 $2,762   ROW Revenues (GAAP)                                   $2,747 $2,737
      exclude:                                                              exclude:
        a) f/x impact on Q2'10 revenues using Q1'10 rates                     a) f/x impact on Q1'10 revenues using Q4'09 rates
        (gains)/losses                                        n/a    129      (gains)/losses                                        n/a        92
        b) hedging gains                                      -      (60)     b) hedging gains                                      -      -
      ROW revenues excluding f/x and hedging impact                         ROW revenues excluding f/x and hedging impact
      (
      (Non-GAAP)   )                                        $2,737 $2,831   (Non-GAAP)
                                                                            (            )                                        $2,747 $2,829

      Q/Q % (Non-GAAP)                                                3%    Q/Q % (Non-GAAP)                                                   3%

12
     Table 1 - Reconciliations of non-GAAP costs and expenses
     to GAAP costs and expenses
                                                                       As a % of                        As a % of                      As a % of
     ($ in millions)                                       Q2'09      Revenues (1)      Q1'10          Revenues (1)       Q2'10       Revenues (1)
     Cost of revenues (GAAP)                           $     2 108
                                                             2,108            38% $         2 452
                                                                                            2,452              36% $         2 467
                                                                                                                             2,467            36%
     Less: Stock-based compensation expense                    (14)                            (6)                              (8)
     Cost of revenues (non-GAAP)                       $     2,094            38% $         2,446              36% $         2,459            36%

     Research and development (GAAP)                   $       708            13% $           818              12% $           898            13%
     Less: Stock-based compensation expense                   (182)                          (191)                            (202)
                               (non-GAAP)
     Research and development (non GAAP)               $       526            10% $           627               9% $           696            10%

     Sales and marketing (GAAP)                        $      469              8% $             607             9% $          629              9%
     Less: Stock-based compensation expense                   (57)                              (54)                          (56)
     Sales and marketing (non-GAAP)                    $      412              7% $             553             8% $          573              8%

     General and administrative (GAAP)                 $      364              7% $             410             6% $          461              7%
     Less: Stock-based compensation expense                   (40)                              (40)                          (43)
     General and administrative (non-GAAP)             $      324              6% $             370             6% $          418              7%

     Total costs and expenses (GAAP)                   $     3,649            66% $         4,287              63% $         4,455            65%
     Less: Stock-based compensation expense                   (293)                          (291)                            (309)
     Total    t    d          (     GAAP)
     T t l costs and expenses (non-GAAP)               $     3,356
                                                             3 356            61% $         3,996
                                                                                            3 996              59% $         4 146
                                                                                                                             4,146            61%

     (1) Percentages based on revenues of $5,523 million in Q2'09, $6,775 million in Q1'10 and $6,820 million in Q2'10.




13
      Table 2 - Reconciliations of non-GAAP results of operations
      measures to the nearest comparable GAAP measures



                                                                           Operating                    Operating                    Operating
 ($ in millions except per share amounts)                       Q2'09      Margin (1)        Q1'10      Margin (1)        Q2'10      Margin (1)
 Income from operations (GAAP)                              $     1,874            34% $       2,488             37% $       2,365          35%
 Add S k b      d          i
 Add: Stock-based compensation expense                              293                          291                           309
 Income from operations (non-GAAP)                          $     2,167            39% $       2,779             41% $       2,674          39%

 Net income (GAAP)                                          $     1,485                  $     1,955                  $      1,840
 Add: Stock-based compensation expense (net of tax)                 223                          226                           239
            (non-GAAP)
 Net income (non GAAP)                                      $     1,708                  $     2,181                  $      2,079

 Net income per share - diluted (GAAP)                      $      4.66                  $      6.06                  $       5.71
 Net income per share - diluted (non-GAAP)                  $      5.36                  $      6.76                  $       6.45
 Shares used in per share calculation - diluted                     319                          323                           322

                                      $5,523            Q2'09 $6,775             Q1'10     $6,820            Q2'10
 (1) Percentages based on revenues of $5 523 million in Q2 09, $6 775 million in Q1 10 and $6 820 million in Q2 10.




14
    Q2 2010
Quarterly Earnings
    Summary

				
DOCUMENT INFO
Shared By:
Tags: google
Stats:
views:18
posted:7/21/2012
language:English
pages:15
Description: google