14 slides from Alphabet Inc (google) Class C's earnings presentation, February 2015
Slide 1: Q4 2014 Quarterly Earnings Summary
Q4 2014 Quarterly Earnings Summary Google Confidential and Proprietary
Slide 2: Quarterly Revenues
Quarterly Revenues Revenues by Revenue Source U.S. vs. International ($ in millions) ($ in millions) $25,000 Q4'14 Y/Y Change = 15% 12,905 12,951 13,107 13,754 15,707 15,420 15,955 16,523 18,103 Q4'14 Q/Q Change = 10% 100% 54% 55% 55% 56% 56% 57% 58% 58% 56% 90% $20,000 18,103 80% 15,955 16,523 15,7
Slide 3: Paid Clicks
Paid Clicks (1) 50% Y/Y Paid Clicks Growth % 25% Q/Q Paid Clicks Growth % 44% 40% 40% 37% 20% 18% 33% 31% 16% 29% 30% 15% 26% 26% 25% 25% 13% 24% 23% 11% 11% 20% 20% 17% 10% 9% 8% 14% 13% 7% 6% 10% 9% 9% 5% 10% 5% 4% 4% 4% 5% 3% 3% 2% 2% 2% 2% 0% 0% -1% -3% -4% (11)% -5% -5% -10% -5% -7% -20% -10% Q
Slide 4: Cost-Per-Click
Cost-Per-Click Y/Y Cost-Per-Click Growth % Q/Q Cost-Per-Click Growth % 10% 15% 6% 10% 5% 10% 0% 5% 4% -2% -2% 3% 3% -3% 2% -4% -4% -5% 0% 0% 0% 0% -5% -6% -6% -6% 0% -1% -7% -2% -2% -2% -2% -8% -8% -8% -3% -9% -9% -4% -4% -4% -5% -10% -11% -11% -5% -6% -12% -7% -7% -13% -13% -8% -8% -15% -15% -10% -
Slide 5: Traffic Acquisition Costs
Traffic Acquisition Costs 3,623 30% $3,500 3,348 3,311 3,293 3,232 3,076 2,962 3,013 2,972 $3,000 25.5% 24.9% 25.0% $2,500 25% 23.7% 23.5% 23.3% (in millions) 22.9% 22.8% $2,000 22.4% $1,500 20% $1,000 $500 $0 15% Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 TAC (in millions) TAC as % of Ad
Slide 6: Costs and Expenses
Costs and Expenses Q4 2013 Q3 2014 Q4 2014 GAAP $ in millions As % of revenues $ in millions As % of revenues $ in millions As % of revenues Cost of Revenues $6,253 40% $6,695 40% $6,921 38% Research & Development $1,933 12% $2,655 16% $2,813 16% Sales & Marketing $1,908 12% $2,084 13% $2,377 13% Ge
Slide 7: Profitability
Profitability GAAP ($ in millions) Q4 2013 Q3 2014 Q4 2014 Income from Operations $4,429 $3,724 $4,399 Operating Margin (1) 28% 23% 24% Net Income from Continuing Operations $3,882 $2,998 $3,790 Net (Loss) income from Discontinued Operations $(506) $(185) $967 Net Income $3,376 $2,813 $4,757 EPS (Di
Slide 8: Consolidated Free Cash Flow
Consolidated Free Cash Flow Non-GAAP ($ in millions) Q4 2013 (1) Q3 2014 (1) Q4 2014 (1) Net cash provided by operating activities $5,238 $5,994 $6,364 Less: Purchases of property and equipment $(2,255) $(2,417) $(3,551) Free Cash Flow $2,983 $3,577 $2,813 (1) Includes Motorola Mobile. 8
Slide 9: Overview of Q4 2014 OI&E and FX
Overview of Q4 2014 OI&E and FX • In Q4, we recognized $128M of Interest and Other Income, net. • In Q4, we recognized $221M of interest income earned on our investments, $13M of net realized gains on marketable securities, and $25M of interest expense on our long-term debt. • We recognized $133M of
Slide 10: Revenues by Geography
Revenues by Geography ($ in millions) Q4 2013 Q3 2014 Q4 2014 United States $6,940 $6,975 $7,878 United Kingdom 1,503 1,627 1,657 Rest of the world 7,264 7,921 8,568 Total Revenues $15,707 $16,523 $18,103 10
Slide 11: International Revenues excluding Hedging and FX Impact (Y/Y)
International Revenues excluding Hedging and FX Impact (Y/Y) ($ in millions) Q4 2013 Q4 2014 UK revenues (GAAP) $1,503 $1,657 exclude: a) f/x impact on Q4'14 revenues using Q4'13 rates N/A 12 b) hedging gains (2) (3) UK revenues excluding f/x and hedging impact (Non- $1,501 $1,666 GAAP) Y/Y% (Non-GA
Slide 12: International Revenues excluding Hedging and FX Impact (Q/Q)
International Revenues excluding Hedging and FX Impact (Q/Q) ($ in millions) Q3 2014 Q4 2014 UK revenues (GAAP) $1,627 $1,657 exclude: a) f/x impact on Q4'14 revenues using Q3'14 rates N/A 78 b) hedging gains — (3) UK revenues excluding f/x and hedging impact (Non-GAAP) $1,627 $1,732 Q/Q% (Non-GAAP)
Slide 13: Table 1 - Reconciliations of consolidated GAAP to non-GAAP costs and expenses
Table 1 - Reconciliations of consolidated GAAP to non-GAAP costs and expenses Q4 2013 Q3 2014 Q4 2014 $ in millions As a % of revenues (1) $ in millions As a % of revenues (1) $ in millions As a % of revenues (1) Cost of Revenues (GAAP) $6,253 40% $6,695 40% $6,921 38% Less: Non-GAAP adjustments (2)
Slide 14: Table 2 - Reconciliations of non-GAAP consolidated results of operations measures
Table 2 - Reconciliations of non-GAAP consolidated results of operations measures to the nearest comparable GAAP measures ($ in millions) Q4 2013 Q3 2014 Q4 2014 Income from operations (GAAP) $4,429 $3,724 $4,399 (1) Operating margin 28% 23% 24% Add: Stock-based compensation expense (SBC) from conti