14 slides from Alphabet Inc (google) Class C's earnings presentation, January 2014
Slide 1: Q4 2013 Quarterly Earnings Summary
Q4 2013 Quarterly Earnings Summary Google Confidential and Proprietary
Slide 2: Q4 2013 Highlights
Q4 2013 Highlights Financial Highlights: Operational Highlights: Consolidated revenues growth of 17% Y/Y and 13% Q/Q. Strong financial metrics: revenue growth and cash flow. Consolidated revenues were $16.86 billion. Continuing to invest in three major areas of focus: • Google segment revenues were
Slide 3: Consolidated Quarterly Revenues
Consolidated Quarterly Revenues Consolidated Revenues by Revenue Source U.S. vs. International ($ in millions) ($ in millions) $20,000 8,575 9,026 9,720 10,584 10,645 11,807 13,304 14,419 13,969 14,105 14,893 16,858 Q4'13 Y/Y Growth = 17% 16,858(1) 100% Q4'13 Q/Q Growth = 13% 53% 54% 55% 53% 54% 54%
Slide 4: Traffic Acquisition Costs
Traffic Acquisition Costs $3,500 30% $3,000 25.5% 25.5% $2,500 24.9% 25.0% 24.5% 24.5% 24.7% 25% 24.2% 24.1% 23.7% 23.7% 23.5% (in millions) $2,000 3,311 $1,500 3,076 2,962 3,013 2,972 2,770 2,510 2,600 2,453 20% 2,110 2,210 $1,000 2,038 $500 $0 15% Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1
Slide 5: Consolidated Costs and Expenses
Consolidated Costs and Expenses Q4 2012 Q3 2013 Q4 2013 GAAP $ in millions As % of revenues $ in millions As % of revenues $ in millions As % of revenues Cost of Revenues $6,213 43% $6,413 43% $7,438 44% Research & Development $1,935 13% $2,017 14% $2,111 13% Sales & Marketing $1,751 12% $1,806 12%
Slide 6: Profitability
Profitability Consolidated GAAP ($ in millions) Q4 2012 Q3 2013 Q4 2013 Income from Operations $3,394 $3,444 $3,922 Operating margin 24% 23% 23% Net Income from continuing operations $2,907 $2,955 $3,381 Net Income (loss) from discontinued $(21) $15 $(5) operations Net Income $2,886 $2,970 $3,376 EP
Slide 7: Segment Profitability
Segment Profitability Google Segment ($ in millions) Q4 2012 Q3 2013 Q4 2013 Income from Operations (Segment) $4,424 $4,635 $5,315 (1) Operating margin 34% 34% 34% Motorola Mobile Segment ($ in millions) Q4 2012 Q3 2013 Q4 2013 Loss from Operations (Segment) $(152) $(248) $(384) (2) Operating margin
Slide 8: Consolidated Free Cash Flow
Consolidated Free Cash Flow Non-GAAP ($ in millions) Q4 2012 (1) Q3 2013 Q4 2013 Net cash provided by operating activities $4,669 $5,083 $5,238 Less: Purchases of property and equipment $(1,020) $(2,289) $(2,255) Free Cash Flow $3,649 $2,794 $2,983 (1) Including Motorola Home. 8
Slide 9: Overview of Q4 2013 OI&E and FX
Overview of Q4 2013 OI&E and FX • In Q4, we recognized $125M of Interest and Other Income, net. • In Q4, we recognized $215M of interest income earned on our investments, $23M in net realized gains, and $21M of interest expense on our long-term debt. • We recognized $108M of foreign exchange loss, o
Slide 10: Google Segment - Revenues by Geography
Google Segment - Revenues by Geography ($ in millions) Q4 2012 Q3 2013 Q4 2013 United States $5,992 $6,098 $6,948 United Kingdom 1,305 1,389 1,503 Rest of the world 5,608 6,285 7,269 Total Revenues $12,905 $13,772 $15,720 10
Slide 11: Google Segment - International Revenues excluding Hedging and FX Impact (Y/Y)
Google Segment - International Revenues excluding Hedging and FX Impact (Y/Y) ($ in millions) Q4 2012 Q4 2013 ($ in millions) Q3 2012 Q3 2013 UK revenues (GAAP) $1,305 $1,503 UK revenues (GAAP) $1,216 $ 1,389 exclude: exclude: a) f/x impact on Q4'13 revenues a) f/x impact on Q3'13 revenues n/a (5) n
Slide 12: Google Segment - International Revenues excluding Hedging and FX Impact (Q/Q)
Google Segment - International Revenues excluding Hedging and FX Impact (Q/Q) ($ in millions) Q3 2013 Q4 2013 ($ in millions) Q2 2013 Q3 2013 UK revenues (GAAP) $1,389 $1,503 UK revenues (GAAP) $1,321 $1,389 exclude: exclude: a) f/x impact on Q4'13 revenues a) f/x impact on Q3'13 revenues n/a (54) n
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 2012 Q3 2013 Q4 2013 $ 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) $6,213 43% $6,413 43% $7,438 44% Less: Non-GAAP adjustments (2)
Slide 14: Table 2 - Reconciliations of non-GAAP consolidated results of operations
Table 2 - Reconciliations of non-GAAP consolidated results of operations measures to the nearest comparable GAAP measures Consolidated ($ in millions) Q4 2012 Q3 2013 Q4 2013 Income from Operations (GAAP) $3,394 $3,444 $3,922 (1) Operating margin 24% 23% 23% Add: Stock-based compensation expense (SB