Slide 1: Quarterly Earnings Summary Q3 2015
Quarterly Earnings Summary Q3 2015
Slide 2: Quarterly Revenues
Quarterly Revenues Revenues by Revenue Source(1) Revenues by Geography(2) ($ in millions) ($ in millions) 13,754 15,707 15,420 15,955 16,523 18,103 17,258 17,727 18,675 $25,000 100% 10% 10% 10% 10% 10% 9% 10% 10% 10% 90% 45% 44% 44% 45% 46% 46% 45% 45% 43% Y/Y Change = 13% $20,000 Q/Q Change = 5% 80
Slide 3: Traffic Acquisition Costs
Traffic Acquisition Costs $4,000 30% 3,624 3,566 $3,500 3,348 3,345 3,377 3,311 3,293 3,232 2,972 $3,000 25% $2,500 23.5% 23.3% (in millions) 23.1% 22.7% 22.6% $2,000 22.2% 21.6% 21.1% 21.3% $1,500 20% $1,000 $500 $0 15% Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 TAC ($ in millions) TAC a
Slide 4: GAAP Costs and Expenses
GAAP Costs and Expenses $ in millions As a % of Revenues $16,000 100% 13,967 $14,000 13,704 12,799 12,811 12,902 1,477 1,593 80% 77% 76% 75% 11,697 73% 73% 73% 74% 73% $12,000 1,365 1,637 1,450 72% 11,278 11,305 8% 2,223 9% 8% 1,404 2,377 9% 9% 9% 9% 8% 1,184 8% 9,993 1,489 2,084 2,080 $10,000 2,065
Slide 5: Non-GAAP Costs and Expenses
Non-GAAP Costs and Expenses $ in millions As a % of Revenues $14,000 80% 12,503 12,535 68% 68% 68% 69% $12,000 11,608 11,770 67% 67% 1,267 66% 66% 66% 1,407 11,166 10,817 8% 8% 8% 1,260 9% 8% 7% 10,405 10,466 1,414 7% 7% 7% 1,142 60% $10,000 1,229 1,973 1,058 2,164 1,348 12% 9,137 1,884 10% 11% 11%
Slide 6: Operating Income and Operating Margin
Operating Income and Operating Margin GAAP Non-GAAP 6,140 5,957 $5,000 4,825 50% $6,000 50% 4,708 5,600 5,650 4,429 4,447 $5,500 5,302 5,357 4,399 $4,500 45% 5,138 45% 4,258 4,115 4,954 $5,000 $4,000 40% 4,617 40% 3,761 3,724 $4,500 $3,500 35% 34% 34% 34% 35% 33% 33% $4,000 32% 32% 32% 31% $3,000 30
Slide 7: Net Income and Earnings per Share
Net Income and Earnings per Share (1) GAAP Non-GAAP 5,102 $5,000 $8 $5,000 4,829 $8 4,675 4,654 4,519 7.35 4,461 $4,500 $4,500 4,299 6.99 6.79 $7 4,218 6.76 $7 6.63 4,104 3,979 6.47 3,931 6.25 $4,000 $4,000 6.16 6.43 3,770 5.98 5.73 $6 $6 3,515 5.56 $3,500 3,324 3,371 3,351 $3,500 5.10 4.87 4.92 4.8
Slide 8: Constant Currency Q3'15 Revenues Using Q3'14 Rates (Y/Y)
Constant Currency Q3'15 Revenues Using Q3'14 Rates (Y/Y) UK Revenues Rest of the world (ROW) Revenues Constant Currency Revenue Constant Currency Revenue Growth rate(1) = 18% Growth rate(2) = 23% 2,000 1,917 10,000 9,301 20 1,792 (145) 266 8,135 8,000 1,500 (1,432) 6,000 $ (Millions) $ (Millions) 1,
Slide 9: Constant Currency Q3'15 Revenues Using Q2'15 Rates (Q/Q)
Constant Currency Q3'15 Revenues Using Q2'15 Rates (Q/Q) UK Revenues Rest of the world (ROW) Revenues Constant Currency Revenue Constant Currency Revenue Growth rate(1) = 7% Growth rate(2) = 5% 2,000 10,000 39 20 1,792 1,733 266 8,135 7,930 8,000 1,500 (61) 6,000 $ (Millions) $ (Millions) 1,000 4,00
Slide 10: Paid Clicks
Paid Clicks 50% Y/Y Paid Clicks Growth % 25% Q/Q Paid Clicks Growth % 44% 40% 40% 37% 20% 35% 18% 33% 31% 16% 30% 30% 15% 26% 26% 25% 25% 25% 13% 24% 23% 11% 11% 10% 20% 18% 17% 10% 8% 14% 13% 7% 7% 7% 6% 10% 10% 9% 9% 5% 6% 4% 4% 4% 5% 3% 2% 2% 2% 0% 0% 0% (1)% (1)% (5)% (2)% (3)% (3)% (9)% (4)% (1
Slide 11: Cost-per-Click
Cost-per-Click Y/Y Cost-Per-Click Growth % Q/Q Cost-Per-Click Growth % 10% 15% 6% 10% 5% 10% 2% 0% 5% (2)% 3% 3% (3)% (3)% 2% (4)% (4)% 1% 0% 0% 0% 0% -5% (6)% (6)% 0% (1)% (1)% (7)% (7)% (2)% (2)% (8)% (8)% (3)% (3)% (2)% (9)% (3)% (4)% (4)% (4)% (5)% (5)% -10% (11)% (11)% (11)% (11)% -5% (5)% (12)
Slide 12: Capital Expenditures & Free Cash Flow
Capital Expenditures & Free Cash Flow ($ in millions) $8,000 6,985 6,617 6,364 5,994 6,007 $6,000 5,627 2,515 5,238 5,083 2,927 2,417 2,373 4,391 3,551 2,646 4,470 $4,000 2,255 2,289 3,577 3,690 3,634 2,345 2,983 2,981 2,794 2,813 $2,000 2,046 $0 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15
Slide 13: Overview of Q3 2015 OI&E
Overview of Q3 2015 OI&E $ (in millions) Interest income $ 259 Interest expense (26) Realized loss on marketable securities, net (6) Foreign currency exchange loss, net(1) (100) Realized gain on non-marketable investments, net 7 Other income, net 49 Interest & Other income, net $ 183 (1) Our foreign
Slide 14: Table 1: Reconciliations of consolidated GAAP to non-GAAP costs and expenses
Table 1: Reconciliations of consolidated GAAP to non-GAAP costs and expenses Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Cost of Revenues (GAAP) $5,409 $6,253 $5,961 $6,114 $6,695 $6,921 $6,356 $6,583 $7,037 Less: Non-GAAP adjustments (1) (2) (133) (127) (95) (100) (547) (171) (160) (163)
Slide 15: Table 2: Reconciliations of non-GAAP consolidated results of operations measures
Table 2: Reconciliations of non-GAAP consolidated results of operations measures to the nearest comparable GAAP measures ($ in millions) Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Income from operations (GAAP) $3,761 $4,429 $4,115 $4,258 $3,724 $4,399 $4,447 $4,825 $4,708 Add: Stock-based