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Operational Highlights
Strong financial metrics: revenue growth, profitability, cash flow Continuing to invest in three major areas of focus:
Core ads: Search and Display advertising Businesses demonstrating high consumer success: YouTube, Android, Chrome New businesses where were investing to drive adoption and innovation: Social, Enterprise, Commerce, Local
Quarterly Revenues
$11,000
$10,000
Q411 Y/Y Growth = 25% Q411 Q/Q Growth = 9% 10,584 9,720 8,575 9,026
2,595 2,880
$9,000
$8,000
8,440 7,286
2,484
($ in millions)
$7,000
$6,000
2,495 2,199
2,427
5,945
2,044
2,036
2,063
$5,000
$4,000
1,801
7,294 6,740 5,672 3,956 5,879
6,232
4,833
$1,000
$0 178 Q1'09 186 Q2'09 188 Q3'09 209 Q4'09 300 Q1'10 258 Q2'10
Other
254 Q3'10
273 Q4'10
269
Q1'11
Network
310 Q2'11
385 Q3'11
410 Q4'11
Google.com
80%
52%
70% 60%
53%
53%
53%
53%
52%
52%
52%
53%
54%
55%
53%
50% 40%
30%
48%
20%
47%
47%
47%
47%
48%
48%
48%
47%
46%
45%
47%
10% 0%
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 US
4
Q2'10
Q3'10
Q4'10
Q1'11
Q2'11
Q3'11
Q4'11
International
26.9%
$2,000
24.5%
24.2% 23.7%
24.1%
25%
($ in millions)
$1,500
2,453
$1,000
1,436 1,453
2,210
20%
$500
$0
Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11
TAC TAC as % of Advertising Revenues
15%
Q4'10
$2,946
35%
Q3'11
$3,378
35%
Q4'11
$3,702
35%
$1,051
12%
$1,404
14%
$1,298
12%
$902
11%
$1,204
12%
$1,268
12%
$559
7%
$676
7%
$809
8%
$5,458
65%
$6,662
69%
$7,077
67%
Non-GAAP ($ in millions)
Cost of Revenues
Percent of revenues
Q4'10
$2,901
34%
Q3'11
$3,306
34%
Q4'11
$3,625
34%
$827
10%
$1,093
11%
$1,032
10%
$826
10%
$1,100
11%
$1,163
11%
$508
6%
$592
6%
$721
7%
$5,062
60%
$6,091
63%
$6,541
62%
Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and expenses to GAAP costs and expenses
Profitability
GAAP ($ in millions except per share amounts) Income from Operations Operating Margin Net Income EPS (diluted) Non-GAAP ($ in millions except per share amounts) Income from Operations Operating Margin Net Income EPS (diluted)
$ $ $ $
Q4'10
$ 2,982 35% 2,543 7.81
Q3'11
$ 3,058 31% $ $ 2,729 8.33
Q4'11
$ 3,507 33% $ $ 2,705 8.22
Q4'10
$ 3,378 40% 2,850 8.75
Q3'11
$ 3,629 37% $ $ 3,184 9.72
Q4'11
$ 4,043 38% $ $ 3,127 9.50
Note: Please refer to supporting Table 2 for reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures
($ in millions) Net cash provided by operating activities Less purchases of property and equipment
Q4'10
$3,526
Q3'11
$3,950
Q4'11
$3,924
($2,545)
($680)
($951)
$981
$3,270
$2,973
Revenues by Geography
Q4'10
$4,055 $878
Q3'11
$4,420 $1,047
Q4'11
$4,980 $1,064
$3,507
$8,440
$4,253
$9,720
$4,540
$10,584
10
($ in millions) UK revenues (GAAP) exclude: a) f/x impact on Q4'11 revenues using Q4'10 rates (gains)/losses b) hedging gains UK revenues excluding f/x and hedging impact (NonGAAP) Y/Y % (Non-GAAP)
($ in millions) UK revenues (GAAP) exclude: a) f/x impact on Q3'11 revenues using Q3'10 rates (gains)/losses b) hedging gains UK revenues excluding f/x and hedging impact (NonGAAP) Y/Y % (Non-GAAP)
Q3'10
Q3'11
$840 $1,047
n/a (2)
2 (6)
n/a (11)
(56) -
$829
$991 20%
($ in millions) ROW revenues (GAAP) exclude: a) f/x impact on Q4'11 revenues using Q4'10 rates (gains)/losses b) hedging gains ROW revenues excluding f/x and hedging impact (NonGAAP) Y/Y % (Non-GAAP)
($ in millions) ROW revenues (GAAP) exclude: a) f/x impact on Q3'11 revenues using Q3'10 rates (gains)/losses b) hedging gains ROW revenues excluding f/x and hedging impact (NonGAAP) Y/Y % (Non-GAAP)
Q3'10
Q3'11
$2,929 $4,253
n/a (23)
(41) (19)
n/a (78)
(427) (1)
11
($ in millions) UK revenues (GAAP) exclude: a) f/x impact on Q4'11 revenues using Q3'11 rates (gains)/losses b) hedging gains UK revenues excluding f/x and hedging impact (NonGAAP) Q/Q % (Non-GAAP)
($ in millions) UK revenues (GAAP) exclude: a) f/x impact on Q3'11 revenues using Q2'11 rates (gains)/losses b) hedging gains UK revenues excluding f/x and hedging impact (NonGAAP) Q/Q % (Non-GAAP)
Q2'11
Q3'11
$976 $1,047
n/a -
32 (6)
n/a -
1 -
$1,047 $1,090 4%
$976 $1,048 7%
($ in millions) ROW revenues (GAAP) exclude: a) f/x impact on Q4'11 revenues using Q3'11 rates (gains)/losses b) hedging gains ROW revenues excluding f/x and hedging impact (NonGAAP) Q/Q % (Non-GAAP)
($ in millions) ROW revenues (GAAP) exclude: a) f/x impact on Q3'11 revenues using Q2'11 rates (gains)/losses b) hedging gains ROW revenues excluding f/x and hedging impact (NonGAAP) Q/Q % (Non-GAAP)
Q2'11
Q3'11
$3,895 $4,253
n/a (1)
207 (19)
n/a (4)
(54) (1)
$3,891 $4,198 8%
12
Table 1 - Reconciliations of non-GAAP costs and expenses to GAAP costs and expenses
($ 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) Total costs and expenses (GAAP) Less: Stock-based compensation expense Total costs and expenses (non-GAAP)
Q4'10 $ $ $ $ $ $ $ $ $ 2,946 (45) 2,901 1,051 (224) 827 902 (76) 826 559 (51) 508 5,458 (396) 5,062
Q3'11 3,378 (72) 3,306 1,404 (311) 1,093 1,204 (104) 1,100 676 (84) 592 6,662 (571) 6,091
Q4'11 $ $ $ $ $ $ $ $ $ 3,702 (77) 3,625 1,298 (266) 1,032 1,268 (105) 1,163 809 (88) 721 7,077 (536) 6,541
60%
63%
62%
(1) Percentages based on revenues of $8,440 million in Q4'10, $9,720 million in Q3'11 and $10,584 million in Q4'11.
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 Income from operations (non-GAAP) Net income (GAAP) Add: Stock-based compensation expense (net of tax) Net income (non-GAAP) Net income per share - diluted (GAAP) Net income per share - diluted (non-GAAP) Shares used in per share calculation - diluted $ $ $ $ $ $
Q4'10 2,982 396 3,378 2,543 307 2,850 7.81 8.75 326
Q3'11 3,058 571 3,629 2,729 455 3,184 8.33 9.72 327
Q4'11 3,507 536 4,043 2,705 422 3,127 8.22 9.50 329
(1) Percentages based on revenues of $8,440 million in Q4'10, $9,720 million in Q3'11 and $10,584 million in Q4'11.
14