Slide 1: Q1 2014 Quarterly Earnings Summary
Q1 2014 Quarterly Earnings Summary Google Confidential and Proprietary
Slide 2: Q1 2014 Highlights
Q1 2014 Highlights Financial Highlights: Operational Highlights: Revenue growth of 19% Y/Y and decrease of 2% Q/Q. Strong financial metrics: revenue growth and cash flow. Revenues were $15.42 billion. Continuing to invest in three major areas of focus: • Google properties revenues increased 21% Y/Y
Slide 3: Quarterly Revenues
Quarterly Revenues Revenues by Revenue Source U.S. vs. International $20,000 ($ in millions) ($ in millions) 10,645 10,964 11,526 12,905 12,951 13,107 13,754 15,707 15,420 Q1'14 Y/Y Change = 19% Q1'14 Q/Q Change = (2)% 100% 54% 54% 53% 54% 55% 55% 56% 56% 57% 15,707 15,420 90% $15,000 13,754 3,522 8
Slide 4: Traffic Acquisition Costs
Traffic Acquisition Costs $3,500 30% 3,311 3,232 3,076 2,962 3,013 2,972 $3,000 2,770 2,600 2,510 25.5% 25.5% $2,500 25.0% 24.7% 24.9% 24.5% 25% 23.7% 23.5% $2,000 23.3% (in millions) $1,500 20% $1,000 $500 $0 15% Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 TAC (in millions) TAC as % of Ad
Slide 5: Costs and Expenses
Costs and Expenses Q1 2013 Q4 2013 Q1 2014 GAAP $ in millions As % of revenues $ in millions As % of revenues $ in millions As % of revenues Cost of Revenues $5,136 40% $6,253 40% $5,961 39% Research & Development $1,617 12% $1,933 12% $2,126 14% Sales & Marketing $1,435 11% $1,908 12% $1,729 11% Ge
Slide 6: Profitability
Profitability GAAP ($ in millions) Q1 2013 Q4 2013 Q1 2014 Income from Operations $3,748 $4,429 $4,115 Operating margin (1) 29% 28% 27% Net Income from continuing operations $3,528 $3,882 $3,650 Net Income (loss) from discontinued operations $(182) $(506) $(198) Net Income $3,346 $3,376 $3,452 EPS (
Slide 7: Consolidated Free Cash Flow
Consolidated Free Cash Flow Non-GAAP ($ in millions) Q1 2013 (1) Q4 2013 (2) Q1 2014 (2) Net cash provided by operating activities $3,633 $5,238 $4,391 Less: Purchases of property and equipment $(1,203) $(2,255) $(2,345) Free Cash Flow $2,430 $2,983 $2,046 (1) Including Motorola Home and Motorola Mo
Slide 8: Overview of Q1 2014 OI&E and FX
Overview of Q1 2014 OI&E and FX • In Q1, we recognized $357M of Interest and Other Income, net. • In Q1, we recognized $168M of interest income earned on our investments, $74M of net realized gains on marketable securities, $103M of realized gain on equity interests, $117M of gains on non-marketable
Slide 9: Revenues by Geography
Revenues by Geography ($ in millions) Q1 2013 Q4 2013 Q1 2014 United States $5,836 $6,940 $6,656 United Kingdom 1,387 1,503 1,583 Rest of the world 5,728 7,264 7,181 Total Revenues $12,951 $15,707 $15,420 9
Slide 10: International Revenues excluding Hedging and FX Impact (Y/Y)
International Revenues excluding Hedging and FX Impact (Y/Y) ($ in millions) Q1 2013 Q1 2014 UK revenues (GAAP) $1,387 $1,583 exclude: a) f/x impact on Q1'14 revenues using Q1'13 rates n/a (71) b) hedging gains (20) 0 UK revenues excluding f/x and hedging impact (Non- $1,367 $1,512 GAAP) Y/Y% (Non-G
Slide 11: International Revenues excluding Hedging and FX Impact (Q/Q)
International Revenues excluding Hedging and FX Impact (Q/Q) ($ in millions) Q4 2013 Q1 2014 UK revenues (GAAP) $1,503 $1,583 exclude: a) f/x impact on Q1'14 revenues using Q4'13 rates n/a (36) b) hedging gains (2) 0 UK revenues excluding f/x and hedging impact (Non-GAAP) $1,501 $1,547 Q/Q% (Non-GAA
Slide 12: Table 1 - Reconciliations of consolidated GAAP to non-GAAP costs and expenses
Table 1 - Reconciliations of consolidated GAAP to non-GAAP costs and expenses Q1 2013 Q4 2013 Q1 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) $5,136 40% $6,253 40% $5,961 39% Less: Non-GAAP adjustments (2)
Slide 13: Table 2 - Reconciliations of non-GAAP consolidated results of operations measures
Table 2 - Reconciliations of non-GAAP consolidated results of operations measures to the nearest comparable GAAP measures ($ in millions) Q1 2013 Q4 2013 Q1 2014 Income from Operations (GAAP) $3,748 $4,429 $4,115 (1) Operating margin 29% 28% 27% Add: Stock-based compensation expense (SBC) $655 $873