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    2011Q2 Google Earnings Slides

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    Alexia Bonatsos
    Google properties revenue increased 39% Y / Y and 6% Q / Q Network revenues increased 20% Y / Y and 2% Q / Q International revenues were $4. 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, Commerce

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    2011Q2 Google Earnings Slides

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    Alexia Bonatsos
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    Google properties revenue increased 39% Y / Y and 6% Q / Q Network revenues increased 20% Y / Y and 2% Q / Q International revenues were $4. 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, Commerce

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    Google properties revenue increased 39% Y / Y and 6% Q / Q Network revenues increased 20% Y / Y and 2% Q / Q International revenues were $4. 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, Commerce

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    Download as PDF, TXT or read online from Scribd
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    38K views15 pages

    2011Q2 Google Earnings Slides

    Uploaded by

    Alexia Bonatsos
    Google properties revenue increased 39% Y / Y and 6% Q / Q Network revenues increased 20% Y / Y and 2% Q / Q International revenues were $4. 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, Commerce

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    of 15

    Q2 2011 Quarterly Earnings Summary

    Second Quarter 2011 Highlights

    Revenue growth of 32% Y/Y and 5% Q/Q



    Google properties revenue increased 39% Y/Y and 6% Q/Q Network revenues increased 20% Y/Y and 2% Q/Q International revenues were $4.9 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 were investing to drive adoption and innovation: Social, Commerce, Local

    Quarterly Revenues
    $10,000 $9,000 $8,000 $7,000

    Q211 Y/Y Growth = 32% Q211 Q/Q Growth = 5% 9,026 8,440 7,286
    2,495 2,199 2,044 1,801 1,638 1,684 2,036 2,063

    8,575
    2,484 2,427

    6,674 6,775 6,820 5,509 5,523 5,945

    ($ in millions)

    $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0

    5,672 3,956 4,421 4,439 4,499 4,833

    5,879

    6,232

    3,693

    3,653

    178 Q1'09

    186 Q2'09

    188 Q3'09

    209 Q4'09

    300 Q1'10
    Other

    258 Q2'10

    254 Q3'10

    273 Q4'10

    269 Q1'11

    310 Q2'11

    Google.com

    Network

    U.S. vs. International Revenues


    ($ in millions) 5,509
    100% 90% 80%

    5,523 5,945

    6,674 6,775 6,820

    7,286 8,440

    8,575

    9,026

    52%
    70% 60% 50% 40% 30%

    53%

    53%

    53%

    53%

    52%

    52%

    52%

    53%

    54%

    48%
    20% 10% 0% Q1'09
    4

    47%

    47%

    47%

    47%

    48%

    48%

    48%

    47%

    46%

    Q2'09

    Q3'09

    Q4'09

    Q1'10 US

    Q2'10

    Q3'10

    Q4'10

    Q1'11

    Q2'11

    International

    Traffic Acquisition Costs


    $2,200 $2,100 $2,000 $1,900 $1,800 $1,700 $1,600 $1,500 $1,400 $1,300 $1,200 $1,100 $1,000 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 40%

    35%

    30%
    26.9% 27.2% 27.1% 26.6% 26.4% 26.4% 25.7% 25.3%

    ($ in millions)

    24.5%

    24.2%

    25%

    1,436

    1,453

    1,559

    1,721

    1,711

    1,732

    1,805

    2,069 2,038

    2,110

    20%

    15%

    10%
    Q1'09 Q2'09 Q3'09 Q4'09
    TAC

    Q1'10

    Q2'10

    Q3'10

    Q4'10

    Q1'11

    Q2'11

    TAC as % of Advertising Revenues

    Costs and Expenses


    GAAP ($ in millions)
    Cost of Revenues
    Percent of revenues

    Q2'10
    $2,467
    36%

    Q1'11
    $2,936
    34%

    Q2'11
    $3,172
    35%

    Research & Development


    Percent of revenues

    $898
    13%

    $1,226
    14%

    $1,234
    14%

    Sales & Marketing


    Percent of revenues

    $629
    9%

    $1,026
    12%

    $1,091
    12%

    General & Administrative


    Percent of revenues

    $461
    7%

    $591
    7%

    $648
    7%

    Charge Related to Potential Resolution of Department of Justice Investigation


    Percent of revenues

    $0
    0%

    $500
    6%

    $0
    0%

    Total Costs & Expenses


    Percent of revenues

    $4,455
    65%

    $6,279
    73%

    $6,145
    68%

    Non-GAAP ($ in millions)
    Cost of Revenues
    Percent of revenues

    Q2'10
    $2,459
    36%

    Q1'11
    $2,887
    34%

    Q2'11
    $3,121
    35%

    Research & Development


    Percent of revenues

    $696
    10%

    $989
    12%

    $987
    11%

    Sales & Marketing


    Percent of revenues

    $573
    8%

    $948
    11%

    $1,017
    11%

    General & Administrative


    Percent of revenues

    $418
    7%

    $523
    6%

    $585
    6%

    Charge Related to Potential Resolution of Department of Justice Investigation


    Percent of revenues

    $0
    0%

    $0
    0%

    $0
    0%

    Total Costs & Expenses


    Percent of revenues

    $4,146
    61%

    $5,347
    62%

    $5,710
    63%

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

    Profitability
    GAAP ($ in millions except per share amounts) Income from Operations Operating Margin Net Income EPS (diluted)
    $ $

    Q2'10
    $ 2,365 35% 1,840 5.71

    Q1'11
    $ 2,296 27% $ $ 1,798 5.51

    Q2'11
    $ 2,881 32% $ $ 2,505 7.68

    Non-GAAP ($ in millions except per share amounts) Income from Operations Operating Margin Net Income EPS (diluted)

    Q2'10
    $ 2,674 39% $ $ 2,079 6.45

    Q1'11
    $ 3,228 38% $ $ 2,638 8.08

    Q2'11
    $ 3,316 37% $ $ 2,849 8.74

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

    Free Cash Flow

    ($ in millions) Net cash provided by operating activities

    Q2'10
    $2,085

    Q1'11
    $3,172

    Q2'11
    $3,519

    Less purchases of property and equipment

    ($476)

    ($890)

    ($917)

    Free cash flow (non-GAAP)

    $1,609

    $2,282

    $2,602

    Overview of Q2 2011 OI&E and FX


    In Interest and Other Income, Net, we recognized net income of $204M for Q2
    In Q2, we recognized $212M of interest income earned on our investments and $75M in realized gains. We expensed $58M 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 2011 through Q2 2011, our revenue in Q2 2011 would have been $167M lower. Excluding gains related to our FX cash flow hedging program, had foreign exchange rates remained constant from Q2 2010 through Q2 2011, our revenue in Q2 2011 would have been $417M lower. In addition, our FX cash flow hedging program allowed us to recognize a benefit of approximately $4M to international revenue this quarter.

    Revenues by Geography

    ($ in millions) United States United Kingdom Rest of the world Total Revenues

    Q2'10
    $3,288 $770 $2,762 $6,820

    Q1'11
    $4,005 $969 $3,601 $8,575

    Q2'11
    $4,155 $976 $3,895 $9,026

    10

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


    ($ in millions) UK revenues (GAAP) exclude: Q2'10 $770 Q2'11 $976 ($ in millions) UK revenues (GAAP) exclude: Q1'10 $842 Q1'11 $969

    a) f/x impact on Q2'11 revenues using Q2'10 rates (gains)/losses b) hedging gains

    n/a (19)

    (81) -

    a) f/x impact on Q1'11 revenues using Q1'10 rates (gains)/losses b) hedging gains

    n/a (10)

    5 (4)

    UK revenues excluding f/x and hedging impact (Non-GAAP) Y/Y % (Non-GAAP)

    $751

    $895 19%

    UK revenues excluding f/x and hedging impact (Non-GAAP) Y/Y % (Non-GAAP)

    $832

    $970 17%

    ($ in millions) ROW revenues (GAAP) exclude:

    Q2'10 $2,762

    Q2'11 $3,895

    ($ in millions) ROW revenues (GAAP) exclude:

    Q1'10 $2,737

    Q1'11 $3,601

    a) f/x impact on Q2'11 revenues using Q2'10 rates (gains)/losses b) hedging gains

    n/a (60)

    (336) (4)

    a) f/x impact on Q1'11 revenues using Q1'10 rates (gains)/losses b) hedging gains

    n/a -

    (28) (10)

    ROW revenues excluding f/x and hedging impact (Non-GAAP) Y/Y % (Non-GAAP)

    $2,702

    $3,555 32%

    ROW revenues excluding f/x and hedging impact (Non-GAAP) Y/Y % (Non-GAAP)

    $2,737

    $3,563 30%

    11

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

    ($ in millions) UK revenues (GAAP) exclude:

    Q1'11 $969

    Q2'11 $976

    ($ in millions) UK revenues (GAAP) exclude:

    Q4'10 $878

    Q1'11 $969

    a) f/x impact on Q2'11 revenues using Q1'11 rates (gains)/losses b) hedging gains

    n/a (4)

    (29) -

    a) f/x impact on Q1'11 revenues using Q4'10 rates (gains)/losses b) hedging gains

    n/a (2)

    1 (4)

    UK revenues excluding f/x and hedging impact (Non-GAAP)

    $965

    $947

    UK revenues excluding f/x and hedging impact (Non-GAAP)

    $876

    $966

    Q/Q % (Non-GAAP)

    -2%

    Q/Q % (Non-GAAP)

    10%

    ($ in millions) ROW revenues (GAAP) exclude:

    Q1'11 $3,601

    Q2'11 $3,895

    ($ in millions) ROW revenues (GAAP) exclude:

    Q4'10 $3,507

    Q1'11 $3,601

    a) f/x impact on Q2'11 revenues using Q1'11 rates (gains)/losses b) hedging gains

    n/a (10)

    (138) (4)

    a) f/x impact on Q1'11 revenues using Q4'10 rates (gains)/losses b) hedging gains

    n/a (23)

    (20) (10)

    ROW revenues excluding f/x and hedging impact (Non-GAAP)

    $3,591

    $3,753

    ROW revenues excluding f/x and hedging impact (Non-GAAP)

    $3,484

    $3,571

    Q/Q % (Non-GAAP)

    5%

    Q/Q % (Non-GAAP)

    2%

    12

    Table 1 - Reconciliations of non-GAAP costs and expenses to GAAP costs and expenses
    ($ in millions) Cost of revenues (GAAP) Less: Stock-based compensation expense Cost of revenues (non-GAAP) Research and development (GAAP) Less: Stock-based compensation expense Research and development (non-GAAP) Sales and marketing (GAAP) Less: Stock-based compensation expense Sales and marketing (non-GAAP) General and administrative (GAAP) Less: Stock-based compensation expense General and administrative (non-GAAP) $ $ $ $ $ $ $ Q2'10 $ 2,467 (8) 2,459 898 (202) 696 629 (56) 573 461 (43) 418 7% $ 8% 7% $ $ 10% 9% $ $ 36% 13% $ $ As a % of Revenues (1) 36% Q1'11 $ 2,936 (49) 2,887 1,226 (237) 989 1,026 (78) 948 591 (68) 523 6% $ 11% 7% $ $ 12% 12% $ $ 34% 14% $ $ As a % of Revenues (1) 34% Q2'11 $ 3,172 (51) 3,121 1,234 (247) 987 1,091 (74) 1,017 648 (63) 585 6% 11% 7% 11% 12% 35% 14% As a % of Revenues (1) 35%

    Charge related to potential resolution of Department of Justice investigation (GAAP) Less: Charge related to potential resolution of Department of Justice investigation Charge related to potential resolution of Department of Justice investigation (nonGAAP) Total costs and expenses (GAAP) Less: Stock-based compensation expense and charge related to potential resolution of Department of Justice investigation Total costs and expenses (non-GAAP)

    500 (500)

    6%

    $ $

    4,455

    65%

    $ $

    6,279

    0% 73%

    $ $

    6,145

    68%

    (309) $ 4,146 61% $

    (932) 5,347 62% $

    (435) 5,710 63%

    (1) Percentages based on revenues of $6,820 million in Q2'10, $8,575 million in Q1'11 and $9,026 million in Q2'11.

    13

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

    ($ in millions except per share amounts) Income from operations (GAAP) Add: Stock-based compensation expense $

    Q2'10 2,365 309

    Operating Margin (1) 35% $

    Q1'11 2,296 432

    Operating Margin (1) 27% $

    Q2'11 2,881 435

    Operating Margin (1) 32%

    Add: Charge related to potential resolution of Department of Justice investigation Income from operations (non-GAAP) $

    2,674 39% $

    500 3,228 38% $

    3,316 37%

    Net income (GAAP) Add: Stock-based compensation expense (net of tax)

    1,840 239

    1,798 340

    2,505 344

    Add: Charge related to potential resolution of Department of Justice investigation Net income (non-GAAP) $

    2,079 $

    500 2,638 $

    2,849

    Net income per share - diluted (GAAP) Net income per share - diluted (non-GAAP) Shares used in per share calculation - diluted

    $ $

    5.71 6.45 322

    $ $

    5.51 8.08 326

    $ $

    7.68 8.74 326

    (1) Percentages based on revenues of $6,820 million in Q2'10, $8,575 million in Q1'11 and $9,026 million in Q2'11.

    14

    Q2 2011 Quarterly Earnings Summary

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