Description
2009Q4 Google Earnings
Q4 2009 Quarterly Earnings Summary
Fourth Quarter 2009 Highlights
• Revenue growth of 17% Y/Y and 12% Q/Q
– – –
Google properties revenue growth of 16% Y/Y and 12% Q/Q G l ti th f d Network revenues increased 21% Y/Y and 13% Q/Q International revenues were $3.5 billion
• Operational Highlights
– –
Strong financial metrics: revenue growth, profitability, and cash flow Investing in technological innovation: 70/20/10
•
Innovation in our more established business
– •
Search, Display Search Display, Enterprise
Innovation in our new businesses
– •
2
Mobile/Android
Innovation in long-view investments
–
Commerce and social
Quarterly Revenues
Q4’09 Y/Y Growth = 17% Q4’09 Q/Q Growth = 12%
$7,000 $6,500 $6,000 $5,500 $5,000
6,674 5,701 5,945 5,509 5,523
2,044 1,801 1,686 1,655 1,680 1,693 1,638 1,684
5,186
5,367
5,541
($ in millions) $
$4,500 $4,000 $3,500 $3 500 $3,000 $2,500
4,421 $2,000 3,400 $1,500 $1,000 $500 $0 Q1'08
3
3,530
3,672 3 672
3,811
3,693 3 693
3,653
3,956
Q2'08
Q3'08
Q4'08 Network
Q1'09
Q2'09
Q3'09
Q4'09
Google.com
Licensing and Other
U.S. vs. U S vs International Revenues
($ in millions)
5,186
100% 90% 80% 70% 60% 50% 40%
5,367
5,541
5,701
5,509
5,523
5,945
6,674
51%
52%
51%
50%
52%
53%
53%
53%
49%
30% 20% 10% 0% Q1'08
48%
49%
50%
48%
47%
47%
47%
Q2'08
Q3'08
Q4'08
Q1'09
Q2'09
Q3'09
Q4'09
US
4
International
Traffic Acquisition Costs
$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 $0 Q1'08 Q2'08 Q3'08
TAC
5
40%
35%
29.2% 29 2%
28.4%
27.9% 26.9% 26.9%
30%
27.2% 27.1% 26.6%
($ in millions)
1,721 1,486 1,474 1,495 1,483 1,436 1,453 1,559 1 559
25%
20%
15%
10% Q4'08 Q1'09 Q2'09 Q3'09 Q4'09
TAC as % of Advertising Revenues
Costs and Expenses
GAAP $Millions
Cost of Revenues
Percent of revenues
Q4'08
$2,190 $2 190
38%
Q3'09
$2,226 $2 226
37%
Q4'09
$2,408 $2 408
36%
Research & Development
Percent of revenues
$733
13%
$758
13%
$736
11%
Sales & Marketing
Percent of revenues
$506
9%
$498
8%
$583
9%
General & Administrative G l Ad i i t ti
Percent of revenues
$412 $
7%
$389 $
7%
$465 $
7%
Total Costs & Expenses
Percent of revenues
$3,841
67%
$3,871
65%
$4,192
63%
Non-GAAP $Millions
Cost of Revenues
Percent of revenues
Q4'08
$2,178
38%
Q3'09
$2,211
37%
Q4'09
$2,402
36%
Research & Development
Percent of revenues
$551
10%
$563
10%
$557
8%
Sales & Marketing
Percent of revenues
$450
8%
$436
7%
$531
8%
General & Administrative
Percent of revenues
$376
6%
$344
6%
$426
7%
Total Costs & Expenses
Percent of revenues
$3,555
62%
$3,554
60%
$3,916
59%
Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and expenses to GAAP costs and expenses
6
Profitability
GAAP $Millions (except per share amounts) Income from Operations Operating Margin Net Income EPS (diluted) Non-GAAP $Millions (except per share amounts) $Milli ( t h t ) Income from Operations Operating Margin Net Income EPS (diluted)
$ $ $ $ $ $
Q4'08
1,860 33% 382 1.21 $ $ $
Q3'09
2,074 35% 1,639 5.13 $ $ $
Q4'09
2,481 37% 1,974 6.13
Q4'08
2,146 38% 1,616 5.10 $ $ $
Q3'09
2,391 40% 1,884 5.89 $ $ $
Q4'09
2,757 41% 2,188 6.79
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
Free Cash Flow
$Millions Net cash provided by operating activities Less purchases of property and equipment q p
Q4'08
$2,122
Q3'09
$2,726
Q4'09
$2,731
($ ($368) )
($ ($186) )
($ ($221) )
Free cash flow (Non-GAAP)
$1,754
$2,540
$2,510
8
Overview of Q4 2009 OI&E and FX
In Interest Income and Other, Net, we recognized net income of $88M for Q4
• In Q4, the interest income earned on our investments was $67M and we recognized $27M in realized gains. • As a result of foreign exchange rates moving closer to the strike p g g g prices of our options in Q p Q4 relative to Q3, we expensed only $8M related to our FX cash flow hedging program vs. $67M in Q3. • Before hedging, the weaker USD relative to other currencies during the quarter had a positive impact of $ $112M on revenue compared to Q3 and a positive impact of $ $196M compared to Q4’08. • In addition to the positive impact on revenue quarter-over-quarter and year-over-year due to more favorable FX rates our cash flow FX hedging programs allowed us to recognize a rates, benefit of approximately $8M to international revenue this quarter.
9
Table 1 - Reconciliations of non-GAAP costs and expenses to GAAP costs and expenses
$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) (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) Total costs and expenses (GAAP) Less: Stock-based compensation expense Total T t l costs and expenses (non-GAAP) t d ( GAAP) $ $ $ $ $ $ $ $ $ $ Q4'08 2,190 2 190 (12) 2,178 733 (182) 551 506 (56) 450 412 (36) 376 3,841 (286) 3,555 3 555 As a % of Revenues (1) 38% $ 38% $ 13% $ 10% $ 9% $ 8% $ 7% $ 6% $ 67% $ 62% $ Q3'09 2,226 2 226 (15) 2,211 758 (195) 563 498 (62) 436 389 (45) 344 3,871 (317) 3,554 3 554 As a % of Revenues (1) 37% $ 37% $ 13% $ 10% $ 8% $ 7% $ 7% $ 6% $ 65% $ 60% $ Q4'09 2,408 2 408 (6) 2,402 736 (179) 557 583 (52) 531 465 (39) 426 4,192 (276) 3,916 3 916 As a % of Revenues (1) 36% 36% 11% 8% 9% 8% 7% 7% 63% 59%
(1) Percentages based on revenues of $5,701 million in Q4'08, $5,945 million in Q3'09 and $6,674 million in Q4'09.
10
Table 2 - Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures
$ millions except per share amounts Income from operations (GAAP) Add: Stock based compensation expense Stock-based Income from operations (non-GAAP) Net income (GAAP) Add: Stock-based compensation expense (net of tax) Add: Impairment of equity investments (net of tax) Net income ( N ti (non-GAAP) GAAP) Net income per share - diluted (GAAP) Net income per share - diluted (non-GAAP) Shares used in per share calculation - diluted $ $ $
Q4'08 1,860 286 2,146 382 221 1,013 1,616 1 616 1.21 5.10 317
Operating Margin (1) 33% $ 38% $ $
Q3'09 2,074 317 2,391 1,639 245 1,884 1 884 5.13 5.89 320
Operating Margin (1) 35% $ 40% $ $
Q4'09 2,481 276 2,757 1,974 214 2,188 2 188 6.13 6.79 322
Operating Margin (1) 37% 41%
$ $ $
$ $ $
$ $ $
(1) Percentages based on revenues of $5,701 million in Q4'08, $5,945 million in Q3'09 and $6,674 million in Q4'09.
11
Q4 2009 Quarterly Earnings Summary
doc_409801438.pdf
2009Q4 Google Earnings
Q4 2009 Quarterly Earnings Summary
Fourth Quarter 2009 Highlights
• Revenue growth of 17% Y/Y and 12% Q/Q
– – –
Google properties revenue growth of 16% Y/Y and 12% Q/Q G l ti th f d Network revenues increased 21% Y/Y and 13% Q/Q International revenues were $3.5 billion
• Operational Highlights
– –
Strong financial metrics: revenue growth, profitability, and cash flow Investing in technological innovation: 70/20/10
•
Innovation in our more established business
– •
Search, Display Search Display, Enterprise
Innovation in our new businesses
– •
2
Mobile/Android
Innovation in long-view investments
–
Commerce and social
Quarterly Revenues
Q4’09 Y/Y Growth = 17% Q4’09 Q/Q Growth = 12%
$7,000 $6,500 $6,000 $5,500 $5,000
6,674 5,701 5,945 5,509 5,523
2,044 1,801 1,686 1,655 1,680 1,693 1,638 1,684
5,186
5,367
5,541
($ in millions) $
$4,500 $4,000 $3,500 $3 500 $3,000 $2,500
4,421 $2,000 3,400 $1,500 $1,000 $500 $0 Q1'08
3
3,530
3,672 3 672
3,811
3,693 3 693
3,653
3,956
Q2'08
Q3'08
Q4'08 Network
Q1'09
Q2'09
Q3'09
Q4'09
Google.com
Licensing and Other
U.S. vs. U S vs International Revenues
($ in millions)
5,186
100% 90% 80% 70% 60% 50% 40%
5,367
5,541
5,701
5,509
5,523
5,945
6,674
51%
52%
51%
50%
52%
53%
53%
53%
49%
30% 20% 10% 0% Q1'08
48%
49%
50%
48%
47%
47%
47%
Q2'08
Q3'08
Q4'08
Q1'09
Q2'09
Q3'09
Q4'09
US
4
International
Traffic Acquisition Costs
$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 $0 Q1'08 Q2'08 Q3'08
TAC
5
40%
35%
29.2% 29 2%
28.4%
27.9% 26.9% 26.9%
30%
27.2% 27.1% 26.6%
($ in millions)
1,721 1,486 1,474 1,495 1,483 1,436 1,453 1,559 1 559
25%
20%
15%
10% Q4'08 Q1'09 Q2'09 Q3'09 Q4'09
TAC as % of Advertising Revenues
Costs and Expenses
GAAP $Millions
Cost of Revenues
Percent of revenues
Q4'08
$2,190 $2 190
38%
Q3'09
$2,226 $2 226
37%
Q4'09
$2,408 $2 408
36%
Research & Development
Percent of revenues
$733
13%
$758
13%
$736
11%
Sales & Marketing
Percent of revenues
$506
9%
$498
8%
$583
9%
General & Administrative G l Ad i i t ti
Percent of revenues
$412 $
7%
$389 $
7%
$465 $
7%
Total Costs & Expenses
Percent of revenues
$3,841
67%
$3,871
65%
$4,192
63%
Non-GAAP $Millions
Cost of Revenues
Percent of revenues
Q4'08
$2,178
38%
Q3'09
$2,211
37%
Q4'09
$2,402
36%
Research & Development
Percent of revenues
$551
10%
$563
10%
$557
8%
Sales & Marketing
Percent of revenues
$450
8%
$436
7%
$531
8%
General & Administrative
Percent of revenues
$376
6%
$344
6%
$426
7%
Total Costs & Expenses
Percent of revenues
$3,555
62%
$3,554
60%
$3,916
59%
Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and expenses to GAAP costs and expenses
6
Profitability
GAAP $Millions (except per share amounts) Income from Operations Operating Margin Net Income EPS (diluted) Non-GAAP $Millions (except per share amounts) $Milli ( t h t ) Income from Operations Operating Margin Net Income EPS (diluted)
$ $ $ $ $ $
Q4'08
1,860 33% 382 1.21 $ $ $
Q3'09
2,074 35% 1,639 5.13 $ $ $
Q4'09
2,481 37% 1,974 6.13
Q4'08
2,146 38% 1,616 5.10 $ $ $
Q3'09
2,391 40% 1,884 5.89 $ $ $
Q4'09
2,757 41% 2,188 6.79
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
Free Cash Flow
$Millions Net cash provided by operating activities Less purchases of property and equipment q p
Q4'08
$2,122
Q3'09
$2,726
Q4'09
$2,731
($ ($368) )
($ ($186) )
($ ($221) )
Free cash flow (Non-GAAP)
$1,754
$2,540
$2,510
8
Overview of Q4 2009 OI&E and FX
In Interest Income and Other, Net, we recognized net income of $88M for Q4
• In Q4, the interest income earned on our investments was $67M and we recognized $27M in realized gains. • As a result of foreign exchange rates moving closer to the strike p g g g prices of our options in Q p Q4 relative to Q3, we expensed only $8M related to our FX cash flow hedging program vs. $67M in Q3. • Before hedging, the weaker USD relative to other currencies during the quarter had a positive impact of $ $112M on revenue compared to Q3 and a positive impact of $ $196M compared to Q4’08. • In addition to the positive impact on revenue quarter-over-quarter and year-over-year due to more favorable FX rates our cash flow FX hedging programs allowed us to recognize a rates, benefit of approximately $8M to international revenue this quarter.
9
Table 1 - Reconciliations of non-GAAP costs and expenses to GAAP costs and expenses
$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) (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) Total costs and expenses (GAAP) Less: Stock-based compensation expense Total T t l costs and expenses (non-GAAP) t d ( GAAP) $ $ $ $ $ $ $ $ $ $ Q4'08 2,190 2 190 (12) 2,178 733 (182) 551 506 (56) 450 412 (36) 376 3,841 (286) 3,555 3 555 As a % of Revenues (1) 38% $ 38% $ 13% $ 10% $ 9% $ 8% $ 7% $ 6% $ 67% $ 62% $ Q3'09 2,226 2 226 (15) 2,211 758 (195) 563 498 (62) 436 389 (45) 344 3,871 (317) 3,554 3 554 As a % of Revenues (1) 37% $ 37% $ 13% $ 10% $ 8% $ 7% $ 7% $ 6% $ 65% $ 60% $ Q4'09 2,408 2 408 (6) 2,402 736 (179) 557 583 (52) 531 465 (39) 426 4,192 (276) 3,916 3 916 As a % of Revenues (1) 36% 36% 11% 8% 9% 8% 7% 7% 63% 59%
(1) Percentages based on revenues of $5,701 million in Q4'08, $5,945 million in Q3'09 and $6,674 million in Q4'09.
10
Table 2 - Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures
$ millions except per share amounts Income from operations (GAAP) Add: Stock based compensation expense Stock-based Income from operations (non-GAAP) Net income (GAAP) Add: Stock-based compensation expense (net of tax) Add: Impairment of equity investments (net of tax) Net income ( N ti (non-GAAP) GAAP) Net income per share - diluted (GAAP) Net income per share - diluted (non-GAAP) Shares used in per share calculation - diluted $ $ $
Q4'08 1,860 286 2,146 382 221 1,013 1,616 1 616 1.21 5.10 317
Operating Margin (1) 33% $ 38% $ $
Q3'09 2,074 317 2,391 1,639 245 1,884 1 884 5.13 5.89 320
Operating Margin (1) 35% $ 40% $ $
Q4'09 2,481 276 2,757 1,974 214 2,188 2 188 6.13 6.79 322
Operating Margin (1) 37% 41%
$ $ $
$ $ $
$ $ $
(1) Percentages based on revenues of $5,701 million in Q4'08, $5,945 million in Q3'09 and $6,674 million in Q4'09.
11
Q4 2009 Quarterly Earnings Summary
doc_409801438.pdf