q3 2009 earning report of google inc
Post on 23-Aug-2014
1.880 Views
Preview:
DESCRIPTION
TRANSCRIPT
Q3 2009 Quarterly EarningsQuarterly Earnings
Summary
Third Quarter 2009 HighlightsThird Quarter 2009 Highlights• Revenue growth of 7% Y/Y and 8% Q/Q
G l ti th f 8% Y/Y d Q/Q– Google properties revenue growth of 8% Y/Y and Q/Q
– Network revenues increased 7% Y/Y and Q/Q
– International revenues were $3.1 billion
• Operational Highlights– Strong financial metrics: revenue growth, profitability, and cash flow
– Investing in Innovation: 70/20/10
• Innovation in our Core Business
Creating the Perfect Search Engine and Better Ads– Creating the Perfect Search Engine and Better Ads
• Innovation in our Emerging Businesses
– Mobile/Android
2
– Display/YouTube
– Enterprise
Quarterly RevenuesQuarterly Revenues
$6,000
Q3’09 Y/Y Growth = 7%Q3’09 Q/Q Growth = 8%
5 541 5,7015,945
1 6551,680
1,6931,638
1,801
1,684$4,500
$5,000
$5,5005,186
5,3675,541 5,701
5,509 5,523
in m
illio
ns
1,686 1,655
$3 000
$3,500
$4,000
$
3,5303,811
3,4003,693 3,9563,672 3,653$2,000
$2,500
$3,000
$500
$1,000
$1,500
3
$0Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09
Google.com Network Licensing and Other
U S vs International RevenuesU.S. vs. International Revenues
100%5,186 5,367 5,541 5,701 5,509 5,523
($ in millions)5,945
80%
90%
52% 51%51% 50% 52% 53% 53%
50%
60%
70% 52% 51%51% 50% 52% 53% 53%
30%
40%
48% 49%49% 50% 48% 47% 47%
0%
10%
20%
4
0%Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09
US International
Traffic Acquisition Costs
$1,500$1,600 40%
Traffic Acquisition Costs
29 2%$1 100$1,200$1,300$1,400$1,500
35%
1,5591,486 1,474 1,495 1,483 1 436 1 453
27.1%26.9% 26.9% 27.2%27.9%28.4%29.2%
$700$800$900
$1,000$1,100
25%
30%
n m
illio
ns
, 1,474 , , 1,436 1,453
$400$500$600$700
20%
$ in
$0$100$200$300
10%
15%
5
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09
TAC TAC as % of Advertising Revenues
Costs and ExpensesCosts and ExpensesGAAP$Millions Q3'08 Q2'09 Q3'09Cost of Revenues $2 173 $2 108 $2 226Cost of Revenues $2,173 $2,108 $2,226
Percent of revenues 39% 38% 37%
Research & Development $705 $708 $758Percent of revenues 13% 13% 13%
Sales & Marketing $509 $469 $498Percent of revenues 9% 8% 8%
G l & Ad i i t ti $ $ $General & Administrative $507 $364 $389Percent of revenues 9% 7% 7%
Total Costs & Expenses $3,894 $3,649 $3,871Percent of revenues 70% 66% 65%
Non-GAAP$Millions Q3'08 Q2'09 Q3'09Cost of Revenues $2,162 $2,094 $2,211
Percent of revenues 39% 38% 37%
Research & Development $536 $526 $563Percent of revenues 10% 10% 10%
Sales & Marketing $445 $412 $436Percent of revenues 8% 7% 7%
General & Administrative $376 $324 $344Percent of revenues 7% 6% 6%
Total Costs & Expenses $3,519 $3,356 $3,554Percent of revenues 64% 61% 60%
6
Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and expenses to GAAP costs and expenses
Percent of revenues 64% 61% 60%
ProfitabilityProfitability
GAAP$Millions (except per share amounts) Q3'08 Q2'09 Q3'09Income from Operations $1,648 1,874$ 2,074$
Operating Margin 30% 34% 35%
Net Income $1,290 1,485$ 1,639$
EPS (diluted) $4.06 4.66$ 5.13$
Non-GAAP$Milli ( t h t ) Q3'08 Q2'09 Q3'09$Millions (except per share amounts) Q3'08 Q2'09 Q3'09Income from Operations $2,023 2,167$ 2,391$
Operating Margin 37% 39% 40%
Note: Please refer to supporting Table 2 for reconciliations of non-GAAP results of operations
Net Income $1,563 1,708$ 1,884$
EPS (diluted) $4.92 5.36$ 5.89$
7
pp g pmeasures to the nearest comparable GAAP measures
Free Cash FlowFree Cash Flow
$Millions Q3'08 Q2'09 Q3'09Net cash provided by operating activities $2,185 $1,609 $2,726
Less purchases of property and equipment ($452) ($139) ($186)q p ($ ) ($ ) ($ )
Free cash flow (Non-GAAP) $1,733 $1,470 $2,540
8
Overview of Q3 2009 OI&E and FXOverview of Q3 2009 OI&E and FXIn Interest and Other Expenses, we had a net expense of $7M for Q3
• In Q3 the interest income earned on our investments was $47M and we recognized• In Q3, the interest income earned on our investments was $47M and we recognized $19M in realized gains.
• Given the context of where we are now in the economic cycle, we have revised our approach to focus again on increasing our long-term expected returns and began this pp g g g p gtransition in Q3.
• Primarily as a result of our average option strike price having moved closer to the market FX rate in Q3 relative to that in Q2, we expensed $67M related to our cash flow
$FX hedging program, compared to $93M in Q2.
• Also, our cash flow FX hedging programs allowed us to recognize a benefit of approximately $39M to international revenue this quarter.
• Before hedging, the recent weakening of the USD relative to other currencies had a positive impact of $166M on revenue in Q3 compared to the prior quarter, but the strengthening of the USD compared to Q3 of the prior year resulted in a negative impact of roughly $297M
9
of roughly $297M.
Table 1 - Reconciliations of non-GAAP costs and expenses to GAAP costs and expensesto GAAP costs and expenses
$Millions Q3'08As a % of
Revenues (1) Q2'09As a % of
Revenues (1) Q3'09As a % of
Revenues (1)Cost of revenues (GAAP) 2,173$ 39% 2,108$ 38% 2,226$ 37%( ) ,$ ,$ ,$Less: Stock-based compensation expense (11) (14) (15) Cost of revenues (non-GAAP) 2,162$ 39% 2,094$ 38% 2,211$ 37%
Research and development (GAAP) 705$ 13% 708$ 13% 758$ 13%Less: Stock-based compensation expense (169) (182) (195) Research and development (non GAAP) 536$ 10% 526$ 10% 563$ 10%Research and development (non-GAAP) 536$ 10% 526$ 10% 563$ 10%
Sales and marketing (GAAP) 509$ 9% 469$ 8% 498$ 8%Less: Stock-based compensation expense (64) (57) (62) Sales and marketing (non-GAAP) 445$ 8% 412$ 7% 436$ 7%
General and administrati e (GAAP) 507$ 9% 364$ 7% 389$ 7%General and administrative (GAAP) 507$ 9% 364$ 7% 389$ 7%Less: Stock-based compensation expense (36) (40) (45) Less: Settlement agreement with the Authors Guild and the Association of American Publishers ("AAP") (95) - - General and administrative (non-GAAP) 376$ 7% 324$ 6% 344$ 6%
Total costs and expenses (GAAP) 3,894$ 70% 3,649$ 66% 3,871$ 65%Less: Stock-based compensation expense and settlement agreement with the Authors Guild and the AAP (375) (293) (317) Total costs and expenses (non-GAAP) 3,519$ 64% 3,356$ 61% 3,554$ 60%
10
(1) Percentages based on revenues of $5,541 million in Q3'08, $5,523 million in Q2'09 and $5,945 million in Q3'09.
Table 2 - Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measuresmeasures to the nearest comparable GAAP measures
$ millions except per share amounts Q3'08Operating Margin (1) Q2'09
Operating Margin (1) Q3'09
Operating Margin (1)
Income from operations (GAAP) 1,648$ 30% 1,874$ 34% 2,074$ 35%Add: Stock-based compensation expense 280 293 317 Add Settlement agreement ith the A thors G ild and the AAP 95Add: Settlement agreement with the Authors Guild and the AAP 95 - -
Income from operations (non-GAAP) 2,023$ 37% 2,167$ 39% 2,391$ 40%
Net income (GAAP) 1,290$ 1,485$ 1,639$ Add: Stock-based compensation expense (net of tax) 217 223 245 Add: Settlement agreement with the Authors Guild and the AAP (net of tax) 56 - -
Net income (non-GAAP) 1,563$ 1,708$ 1,884$
Net income per share - diluted (GAAP) 4.06$ 4.66$ 5.13$ Net income per share - diluted (non-GAAP) 4.92$ 5.36$ 5.89$ Shares used in per share calculation - diluted 318 319 320
(1) Percentages based on revenues of $5,541 million in Q3'08, $5,523 million in Q2'09 and $5,945 million in Q3'09.
11
Q3 2009 Quarterly EarningsQuarterly Earnings
Summary
top related