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					    Q3 2011
Quarterly Earnings
    Summary
    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




2
    Quarterly Revenues
                                  Q3’11 Y/Y Growth = 33%
                                  Q3’11 Q/Q Growth = 8%
                       $10,000                                                                                             9,720

                                                                                                                   9,026
                        $9,000
                                                                                                8,440 8,575
                                                                                                                            2,595
                        $8,000
                                                                                                                   2,484
                                                                                      7,286
                                                                     6,820                                 2,427
                                                                                                2,495
                        $7,000                           6,674 6,775
     ($ in millions)




                                                 5,945                                2,199
                        $6,000
                                 5,509 5,523             2,044   2,036      2,063

                        $5,000                   1,801
                                 1,638   1,684

                        $4,000
                                                                                                                           6,740
                                                                                                                   6,232
                                                                                                5,672      5,879
                        $3,000
                                                                 4,439      4,499     4,833
                                                         4,421
                                                 3,956
                        $2,000   3,693   3,653


                        $1,000


                                 178     186      188     209     300        258       254       273        269     310     385
                           $0
                                 Q1'09   Q2'09   Q3'09   Q4'09   Q1'10      Q2'10     Q3'10     Q4'10      Q1'11   Q2'11   Q3'11

3                                                                        Other     Google.com    Network
    U.S. vs. International Revenues
                                                  ($ in millions)
               5,509 5,523 5,945 6,674 6,775 6,820 7,286 8,440 8,575 9,026 9,720
        100%


         90%


         80%

               52%     53%     53%     53%     53%     52%        52%      52%     53%     54%     55%
         70%


         60%


         50%


         40%


         30%

               48%     47%     47%     47%     47%     48%        48%      48%     47%     46%     45%
         20%


         10%


         0%
               Q1'09   Q2'09   Q3'09   Q4'09   Q1'10   Q2'10      Q3'10    Q4'10   Q1'11   Q2'11   Q3'11


4                                               US             International
    Traffic Acquisition Costs

                       $2,500                                                                                              30%



                                        27.2% 27.1%
                                26.9%
                       $2,000                           26.6% 26.4% 26.4%
                                                                                25.7%
                                                                                         25.3%
                                                                                                  24.5%                    25%
                                                                                                           24.2%
     ($ in millions)




                                                                                                                   23.7%
                       $1,500



                                                                                                                   2,210
                                                                                         2,069     2,038   2,110
                       $1,000
                                                        1,721           1,732   1,805
                                                                1,711                                                      20%
                                                1,559
                                1,436   1,453

                        $500




                          $0                                                                                               15%
                                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
5
    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%




                         Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and
6
                         expenses to GAAP costs and expenses
    Profitability
      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

            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)              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




8
        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.




9
     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




10
     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                     a) f/x impact on Q2'11 revenues using Q2'10 rates
         (gains)/losses                                         n/a   (56)     (gains)/losses                                         n/a    (81)
         b) hedging gains                                      (11)      -     b) hedging gains                                      (19)        -

       UK revenues excluding f/x and hedging impact (Non-                    UK revenues excluding f/x and hedging impact (Non-
       GAAP)                                                  $829    $991   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                     a) f/x impact on Q2'11 revenues using Q2'10 rates
         (gains)/losses                                         n/a (427)      (gains)/losses                                         n/a   (336)

         b) hedging gains                                      (78)    (1)     b) hedging gains                                      (60)     (4)

       ROW revenues excluding f/x and hedging impact                         ROW revenues excluding f/x and hedging impact
       (Non-GAAP)                                            $2,851 $3,825   (Non-GAAP)                                            $2,702 $3,555

       Y/Y % (Non-GAAP)                                               34%    Y/Y % (Non-GAAP)                                               32%




11
     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                     a) f/x impact on Q2'11 revenues using Q1'11 rates
         (gains)/losses                                         n/a     1      (gains)/losses                                         n/a    (29)

         b) hedging gains                                         -      -     b) hedging gains                                       (4)        -
       UK revenues excluding f/x and hedging impact (Non-                    UK revenues excluding f/x and hedging impact (Non-
       GAAP)                                                  $976 $1,048    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                     a) f/x impact on Q2'11 revenues using Q1'11 rates
         (gains)/losses                                         n/a   (54)     (gains)/losses                                         n/a   (138)

         b) hedging gains                                       (4)    (1)     b) hedging gains                                      (10)     (4)
       ROW revenues excluding f/x and hedging impact                         ROW revenues excluding f/x and hedging impact
       (Non-GAAP)                                            $3,891 $4,198   (Non-GAAP)                                            $3,591 $3,753

       Q/Q % (Non-GAAP)                                                8%    Q/Q % (Non-GAAP)                                                5%




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)                                                  Q3'10        Revenues (1)    Q2'11          Revenues (1)     Q3'11          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.



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)                             Q3'10     Margin (1)       Q2'11     Margin (1)       Q3'11      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.




14
    Q3 2011
Quarterly Earnings
    Summary

				
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