Google News - Investor Relations - Google
News for Google's Investor Relations
Google to Present at the Credit Suisse Technology Conference
https://investor.google.com/releases/2014/1114.html
Nov 17th 2014, 23:22
MOUNTAIN VIEW, Calif. (November 17, 2014) - Google Inc. (NASDAQ:GOOG) announced today that Neal Mohan, Vice President of Display and Video Advertising Products, will participate in a question-and-answer session at the Credit Suisse Technology Conference in Phoenix. The session is scheduled for 9:15 a.m. Mountain Time / 8:15 a.m. Pacific Time / 12:15 p.m. Eastern Time on Tuesday, December 2, 2014.
To access the live audio webcast of the session, please visit http://investor.google.com/webcast.html.
About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.
Google is a trademark of Google Inc. All other company and product names may be trademarks of the respective companies with which they are associated.
Contact:
Investor Relations
irgoog@google.com
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Monday, November 17, 2014
Thursday, October 16, 2014
Google News - Investor Relations - Google: Google Inc. Announces Third Quarter 2014 Results
Google News - Investor Relations - Google
News for Google's Investor Relations
Google Inc. Announces Third Quarter 2014 Results
https://investor.google.com/earnings/2014/Q3_google_earnings.html
Oct 16th 2014, 20:42
Download press release · Download financial data · Open financial data in new window
MOUNTAIN VIEW, Calif. – October 16, 2014 - Google Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended September 30, 2014.
"Google had another strong performance this quarter, with revenue up 20% year on year, at $16.5 billion," said Patrick Pichette, CFO of Google. "We continue to be excited about the growth in our advertising and emerging businesses."
Q3 Financial Summary
Google Inc. reported consolidated revenues of $16.52 billion for the quarter ended September 30, 2014, an increase of 20% compared to the third quarter of 2013. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the third quarter of 2014, TAC totaled $3.35 billion, or 23% of advertising revenues.
Operating income, operating margin, net income, and earnings per share (EPS) are reported on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures at the end of this release.
GAAP operating income in the third quarter of 2014 was $3.72 billion, or 23% of revenues. This compares to GAAP operating income of $3.76 billion, or 27% of revenues, in the third quarter of 2013. Non-GAAP operating income in the third quarter of 2014 was $5.36 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.62 billion, or 34% of revenues, in the third quarter of 2013.
GAAP net income (including net loss from discontinued operations) in the third quarter of 2014 was $2.81 billion, compared to $2.97 billion in the third quarter of 2013. Non-GAAP net income in the third quarter of 2014 was $4.37 billion, compared to $3.82 billion in the third quarter of 2013.
GAAP EPS (including impact from net loss from discontinued operations) in the third quarter of 2014 was $4.09 on 688 million diluted shares outstanding, compared to $4.38 in the third quarter of 2013 on 678 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2014 was $6.35 compared to $5.63 in the third quarter of 2013.
Non-GAAP operating income and non-GAAP operating margin exclude stock-based compensation (SBC) expense. Non-GAAP net income and non-GAAP EPS exclude SBC expense, net of the related tax benefit, as well as net income (loss) from discontinued operations. In the third quarter of 2014, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP EPS also excluded an impairment charge of $378 million related to a patent licensing royalty asset acquired in connection with the purchase of Motorola.
In the third quarter of 2014, the expense related to SBC from our continuing operations and the related tax benefits were $1,255 million and $258 million compared to $856 million and $200 million in the third quarter of 2013. In addition, net loss from discontinued operations in the third quarter of 2014 was $185 million, compared to $193 million in the third quarter of 2013.
On January 29, 2014, we entered into an agreement with Lenovo Group Limited providing for the disposition of the Motorola Mobile business. Financial results of Motorola Mobile are presented as "Net income (loss) from discontinued operations" on the Consolidated Statements of Income for the three and nine months ended September 30, 2013 and 2014; and assets and liabilities of Motorola Mobile to be disposed of are presented as "Assets held for sale" and "Liabilities held for sale", respectively, on the Consolidated Balance Sheet as of September 30, 2014.
On April 2, 2014, we issued shares of Class C capital stock as a dividend to our stockholders. Except for the number of authorized shares and par value, all references to share and per share amounts have been retroactively restated for all prior periods shown to reflect the stock split, which was effected in the form of a stock dividend.
Q3 Financial Highlights
Revenues and other information - Google Inc. revenues for the quarter ended September 30, 2014 were $16.52 billion, representing a 20% increase over third quarter of 2013 revenues of $13.75 billion.
Sites Revenues - Our sites generated revenues of $11.25 billion, or 68% of total revenues, in the third quarter of 2014. This represents a 20% increase over third quarter of 2013 sites revenues of $9.38 billion.
Network Revenues - Our partner sites generated revenues of $3.43 billion, or 21% of total revenues, in the third quarter of 2014. This represents a 9% increase over third quarter of 2013 network revenues of $3.15 billion.
Other Revenues - Other revenues were $1.84 billion, or 11% of total revenues, in the third quarter of 2014. This represents a 50% increase over third quarter of 2013 other revenues of $1.23 billion.
International Revenues - Our revenues from outside of the United States totaled $9.55 billion, representing 58% of total revenues in the third quarter of 2014, compared to 58% in the second quarter of 2014 and 56% in the third quarter of 2013.
Our revenues from the United Kingdom totaled $1.63 billion, representing 10% of total revenues in the third quarter of 2014, compared to 10% in the third quarter of 2013.
Foreign Exchange Impact on Revenues - Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the second quarter of 2014 through the third quarter of 2014, our revenues in the third quarter of 2014 would have been $66 million higher. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the third quarter of 2013 through the third quarter of 2014, our revenues in the third quarter of 2014 would have been $106 million lower.
In the third quarter of 2014, we recognized a benefit of $10 million to revenues through our foreign exchange risk management program, compared to $22 million in the third quarter of 2013.
Reconciliations of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues are included at the end of this release.
Paid Clicks - Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 17% over the third quarter of 2013 and increased approximately 2% over the second quarter of 2014. Sites paid clicks, which include clicks related to ads we serve on Google owned and operated properties across different geographies and form factors including search, YouTube engagement ads like TrueView, and other owned and operated properties like Maps and Finance, increased approximately 24% over the third quarter of 2013 and increased approximately 4% over the second quarter of 2014. Network paid clicks, which include clicks related to ads served on non-Google properties participating in our AdSense for Search, AdSense for Content, and AdMob businesses, increased approximately 2% over the third quarter of 2013 and decreased approximately 4% over the second quarter of 2014.
Cost-Per-Click - Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 2% over the third quarter of 2013 and remained constant from the second quarter of 2014. Cost-per-click for Google sites decreased approximately 4% over the third quarter of 2013 and decreased approximately 1% over the second quarter of 2014. Network cost-per-click decreased approximately 4% over the third quarter of 2013 and increased approximately 2% over the second quarter of 2014.
TAC - Traffic acquisition costs, the portion of revenues shared with Google's partners, increased to $3.35 billion in the third quarter of 2014, compared to $2.97 billion in the third quarter of 2013. TAC as a percentage of advertising revenues was 23% in the third quarter of 2014, compared to 24% in the third quarter of 2013.
The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.42 billion in the third quarter of 2014. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $927 million in the third quarter of 2014.
Other Cost of Revenues - Other cost of revenues, which is comprised primarily of data centers operational expenses, hardware inventory costs, amortization and impairment of acquisition-related intangible assets, and content acquisition costs, increased to $3.35 billion, or 20% of revenues, in the third quarter of 2014, compared to $2.44 billion, or 18% of revenues, in the third quarter of 2013.
Operating Expenses - Operating expenses, other than cost of revenues, were $6.10 billion in the third quarter of 2014, or 37% of revenues, compared to $4.58 billion in the third quarter of 2013, or 33% of revenues.
Depreciation and Loss on Disposal of Property and Equipment, Amortization Expenses, and Impairment of Intangibles and Other Assets - Depreciation and loss on disposal of property and equipment and amortization and impairment of intangibles and other assets were $1.55 billion for the third quarter of 2014, of which $1.52 billion was related to Google, compared to $974 million in the third quarter of 2013. Of the $1.52 billion, $109 million was related to amortization of Motorola intangibles, which Google will retain subsequent to the disposal of Motorola Mobile.
Stock-Based Compensation (SBC) - In the third quarter of 2014, the total charge related to SBC was $1,255 million compared to $856 million in the third quarter of 2013. We currently estimate SBC charges for grants made to employees prior to September 30, 2014 to be approximately $4.16 billion for 2014. This estimate does not include expenses to be recognized related to employee stock awards that are granted after September 30, 2014.
Operating Income - GAAP operating income in the third quarter of 2014 was $3.72 billion, or 23% of revenues. This compares to GAAP operating income of $3.76 billion, or 27% of revenues, in the third quarter of 2013. Non-GAAP operating income in the third quarter of 2014 was $5.36 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.62 billion, or 34% of revenues, in the third quarter of 2013.
Interest and Other Income, Net - Interest and other income, net, was $133 million in the third quarter of 2014, compared to $14 million in the third quarter of 2013.
Income Taxes - Our effective tax rate was 22% for the third quarter of 2014, which includes the effect of the impairment charge of $378 million (discussed above) that is not deductible for income tax purposes.
Net Loss from Discontinued Operations - Net loss from discontinued operations in the third quarter of 2014 was $185 million, compared to $193 million in the third quarter of 2013. Net loss from discontinued operations in the third quarter of 2014 included a pre-tax adjustment of $26 million related to the release of the deferral of certain revenue for the Motorola Mobile segment. Had we presented Motorola Mobile as an operating segment, the Motorola Mobile segment revenue for the third quarter of 2014 would have been $1.69 billion, $26 million lower than what was included in net loss from discontinued operations.
Net Income - GAAP consolidated net income in the third quarter of 2014 was $2.81 billion, compared to $2.97 billion in the third quarter of 2013. Non-GAAP consolidated net income was $4.37 billion in the third quarter of 2014, compared to $3.82 billion in the third quarter of 2013. GAAP EPS in the third quarter of 2014 was $4.09 on 688 million diluted shares outstanding, compared to $4.38 in the third quarter of 2013 on 678 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2014 was $6.35, compared to $5.63 in the third quarter of 2013.
Cash Flow and Capital Expenditures - Net cash provided by operating activities in the third quarter of 2014 totaled $5.99 billion, compared to $5.08 billion in the third quarter of 2013. In the third quarter of 2014, capital expenditures were $2.42 billion, the majority of which was for data-center construction, production equipment, and real estate purchases. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the third quarter of 2014, free cash flow was $3.58 billion compared to $2.79 billion in the third quarter of 2013.
We expect to continue to make significant capital expenditures.
A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.
Cash - As of September 30, 2014, cash, cash equivalents, and marketable securities were $62.16 billion, which excludes cash classified as held for sale, compared to $58.72 billion as of December 31, 2013.
Headcount - On a worldwide basis, we employed 55,030 full-time employees (51,564 in Google and 3,466 in Motorola Mobile) as of September 30, 2014, compared to 52,069 full-time employees (48,584 in Google and 3,485 in Motorola Mobile) as of June 30, 2014.
WEBCAST AND CONFERENCE CALL INFORMATION
A live audio webcast of Google's third quarter 2014 earnings release call will be available at http://investor.google.com/webcast.html. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, the financial tables, as well as other supplemental information including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, are also available on that site.
We also announce investor information, including news and commentary about our business and financial performance, SEC filings, notices of investor events and our press and earnings releases, on our investor relations website (http://investor.google.com) and our investor relations Google+ page (https://plus.google.com/+GoogleInvestorRelations/posts).
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that involve risks and uncertainties. These statements include statements regarding our investments in areas of strategic focus, our expected SBC charges, and our plans to make significant capital expenditures. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, unforeseen changes in our hiring patterns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2013 and our most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 which are on file with the SEC and are available on our investor relations website at investor.google.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014. All information provided in this release and in the attachments is as of October 16, 2014, and we undertake no duty to update this information unless required by law.
ABOUT NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP EPS, free cash flow, and non-GAAP international revenues. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures," "Reconciliation from net cash provided by operating activities to free cash flow," and "Reconciliation from GAAP international revenues to non-GAAP international revenues" included at the end of this release.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results, meaning our operating performance excluding not only non-cash charges, such as SBC, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income excluding expenses related to SBC, and, as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenues. Google considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of SBC, and as applicable, other special items so that Google's management and investors can compare Google's recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Google's management believes that providing a non-GAAP financial measure that excludes SBC allows investors to make meaningful comparisons between Google's recurring core business operating results and those of other companies, as well as providing Google's management with an important tool for financial and operational decision making and for evaluating Google's own recurring core business operating results over different periods of time. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, SBC, that are recurring. SBC has been and will continue to be for the foreseeable future a significant recurring expense in Google's business. Second, SBC is an important part of our employees' compensation. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.
Non-GAAP net income and EPS. We define non-GAAP net income as net income excluding expenses related to SBC and, as applicable, other special items less the related tax effects, as well as net income (loss) from discontinued operations. The tax effects of SBC and, as applicable, other special items are calculated using the tax-deductible portion of SBC, and, as applicable, other special items, and applying the entity-specific, U.S. federal and blended state tax rates. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that Google uses non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with SBC and, as applicable, other special items. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. The same limitations described above regarding Google's use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.
Free cash flow. We define free cash flow as net cash provided by operating activities less capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure and land and buildings, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening the balance sheet. Analysis of free cash flow also facilitates management's comparisons of our operating results to competitors' operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Google is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Our management compensates for this limitation by providing information about our capital expenditures on the face of the statement of cash flows and under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Google has computed free cash flow using the same consistent method from quarter to quarter and year to year.
Non-GAAP international revenues. We define non-GAAP international revenues as international revenues excluding the impact of foreign exchange rate movements and hedging activities. Non-GAAP international revenues are calculated by translating current quarter revenues using prior quarter and prior year exchange rates, as well as excluding any hedging gains realized in the current quarter. We consider non-GAAP international revenues as a useful metric as it facilitates management's internal comparison to our historical performance.
The accompanying tables have more details on the non-GAAP financial measures that are most directly comparable to GAAP financial measures and the related reconciliations between these financial measures.
Contact:
Investor Relations
irgoog@google.com
For Media:
press@google.com
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News for Google's Investor Relations
Google Inc. Announces Third Quarter 2014 Results
https://investor.google.com/earnings/2014/Q3_google_earnings.html
Oct 16th 2014, 20:42
Download press release · Download financial data · Open financial data in new window
MOUNTAIN VIEW, Calif. – October 16, 2014 - Google Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended September 30, 2014.
"Google had another strong performance this quarter, with revenue up 20% year on year, at $16.5 billion," said Patrick Pichette, CFO of Google. "We continue to be excited about the growth in our advertising and emerging businesses."
Q3 Financial Summary
Google Inc. reported consolidated revenues of $16.52 billion for the quarter ended September 30, 2014, an increase of 20% compared to the third quarter of 2013. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the third quarter of 2014, TAC totaled $3.35 billion, or 23% of advertising revenues.
Operating income, operating margin, net income, and earnings per share (EPS) are reported on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures at the end of this release.
GAAP operating income in the third quarter of 2014 was $3.72 billion, or 23% of revenues. This compares to GAAP operating income of $3.76 billion, or 27% of revenues, in the third quarter of 2013. Non-GAAP operating income in the third quarter of 2014 was $5.36 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.62 billion, or 34% of revenues, in the third quarter of 2013.
GAAP net income (including net loss from discontinued operations) in the third quarter of 2014 was $2.81 billion, compared to $2.97 billion in the third quarter of 2013. Non-GAAP net income in the third quarter of 2014 was $4.37 billion, compared to $3.82 billion in the third quarter of 2013.
GAAP EPS (including impact from net loss from discontinued operations) in the third quarter of 2014 was $4.09 on 688 million diluted shares outstanding, compared to $4.38 in the third quarter of 2013 on 678 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2014 was $6.35 compared to $5.63 in the third quarter of 2013.
Non-GAAP operating income and non-GAAP operating margin exclude stock-based compensation (SBC) expense. Non-GAAP net income and non-GAAP EPS exclude SBC expense, net of the related tax benefit, as well as net income (loss) from discontinued operations. In the third quarter of 2014, non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP EPS also excluded an impairment charge of $378 million related to a patent licensing royalty asset acquired in connection with the purchase of Motorola.
In the third quarter of 2014, the expense related to SBC from our continuing operations and the related tax benefits were $1,255 million and $258 million compared to $856 million and $200 million in the third quarter of 2013. In addition, net loss from discontinued operations in the third quarter of 2014 was $185 million, compared to $193 million in the third quarter of 2013.
On January 29, 2014, we entered into an agreement with Lenovo Group Limited providing for the disposition of the Motorola Mobile business. Financial results of Motorola Mobile are presented as "Net income (loss) from discontinued operations" on the Consolidated Statements of Income for the three and nine months ended September 30, 2013 and 2014; and assets and liabilities of Motorola Mobile to be disposed of are presented as "Assets held for sale" and "Liabilities held for sale", respectively, on the Consolidated Balance Sheet as of September 30, 2014.
On April 2, 2014, we issued shares of Class C capital stock as a dividend to our stockholders. Except for the number of authorized shares and par value, all references to share and per share amounts have been retroactively restated for all prior periods shown to reflect the stock split, which was effected in the form of a stock dividend.
Q3 Financial Highlights
Revenues and other information - Google Inc. revenues for the quarter ended September 30, 2014 were $16.52 billion, representing a 20% increase over third quarter of 2013 revenues of $13.75 billion.
Sites Revenues - Our sites generated revenues of $11.25 billion, or 68% of total revenues, in the third quarter of 2014. This represents a 20% increase over third quarter of 2013 sites revenues of $9.38 billion.
Network Revenues - Our partner sites generated revenues of $3.43 billion, or 21% of total revenues, in the third quarter of 2014. This represents a 9% increase over third quarter of 2013 network revenues of $3.15 billion.
Other Revenues - Other revenues were $1.84 billion, or 11% of total revenues, in the third quarter of 2014. This represents a 50% increase over third quarter of 2013 other revenues of $1.23 billion.
International Revenues - Our revenues from outside of the United States totaled $9.55 billion, representing 58% of total revenues in the third quarter of 2014, compared to 58% in the second quarter of 2014 and 56% in the third quarter of 2013.
Our revenues from the United Kingdom totaled $1.63 billion, representing 10% of total revenues in the third quarter of 2014, compared to 10% in the third quarter of 2013.
Foreign Exchange Impact on Revenues - Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the second quarter of 2014 through the third quarter of 2014, our revenues in the third quarter of 2014 would have been $66 million higher. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the third quarter of 2013 through the third quarter of 2014, our revenues in the third quarter of 2014 would have been $106 million lower.
In the third quarter of 2014, we recognized a benefit of $10 million to revenues through our foreign exchange risk management program, compared to $22 million in the third quarter of 2013.
Reconciliations of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues are included at the end of this release.
Paid Clicks - Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 17% over the third quarter of 2013 and increased approximately 2% over the second quarter of 2014. Sites paid clicks, which include clicks related to ads we serve on Google owned and operated properties across different geographies and form factors including search, YouTube engagement ads like TrueView, and other owned and operated properties like Maps and Finance, increased approximately 24% over the third quarter of 2013 and increased approximately 4% over the second quarter of 2014. Network paid clicks, which include clicks related to ads served on non-Google properties participating in our AdSense for Search, AdSense for Content, and AdMob businesses, increased approximately 2% over the third quarter of 2013 and decreased approximately 4% over the second quarter of 2014.
Cost-Per-Click - Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 2% over the third quarter of 2013 and remained constant from the second quarter of 2014. Cost-per-click for Google sites decreased approximately 4% over the third quarter of 2013 and decreased approximately 1% over the second quarter of 2014. Network cost-per-click decreased approximately 4% over the third quarter of 2013 and increased approximately 2% over the second quarter of 2014.
TAC - Traffic acquisition costs, the portion of revenues shared with Google's partners, increased to $3.35 billion in the third quarter of 2014, compared to $2.97 billion in the third quarter of 2013. TAC as a percentage of advertising revenues was 23% in the third quarter of 2014, compared to 24% in the third quarter of 2013.
The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.42 billion in the third quarter of 2014. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $927 million in the third quarter of 2014.
Other Cost of Revenues - Other cost of revenues, which is comprised primarily of data centers operational expenses, hardware inventory costs, amortization and impairment of acquisition-related intangible assets, and content acquisition costs, increased to $3.35 billion, or 20% of revenues, in the third quarter of 2014, compared to $2.44 billion, or 18% of revenues, in the third quarter of 2013.
Operating Expenses - Operating expenses, other than cost of revenues, were $6.10 billion in the third quarter of 2014, or 37% of revenues, compared to $4.58 billion in the third quarter of 2013, or 33% of revenues.
Depreciation and Loss on Disposal of Property and Equipment, Amortization Expenses, and Impairment of Intangibles and Other Assets - Depreciation and loss on disposal of property and equipment and amortization and impairment of intangibles and other assets were $1.55 billion for the third quarter of 2014, of which $1.52 billion was related to Google, compared to $974 million in the third quarter of 2013. Of the $1.52 billion, $109 million was related to amortization of Motorola intangibles, which Google will retain subsequent to the disposal of Motorola Mobile.
Stock-Based Compensation (SBC) - In the third quarter of 2014, the total charge related to SBC was $1,255 million compared to $856 million in the third quarter of 2013. We currently estimate SBC charges for grants made to employees prior to September 30, 2014 to be approximately $4.16 billion for 2014. This estimate does not include expenses to be recognized related to employee stock awards that are granted after September 30, 2014.
Operating Income - GAAP operating income in the third quarter of 2014 was $3.72 billion, or 23% of revenues. This compares to GAAP operating income of $3.76 billion, or 27% of revenues, in the third quarter of 2013. Non-GAAP operating income in the third quarter of 2014 was $5.36 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.62 billion, or 34% of revenues, in the third quarter of 2013.
Interest and Other Income, Net - Interest and other income, net, was $133 million in the third quarter of 2014, compared to $14 million in the third quarter of 2013.
Income Taxes - Our effective tax rate was 22% for the third quarter of 2014, which includes the effect of the impairment charge of $378 million (discussed above) that is not deductible for income tax purposes.
Net Loss from Discontinued Operations - Net loss from discontinued operations in the third quarter of 2014 was $185 million, compared to $193 million in the third quarter of 2013. Net loss from discontinued operations in the third quarter of 2014 included a pre-tax adjustment of $26 million related to the release of the deferral of certain revenue for the Motorola Mobile segment. Had we presented Motorola Mobile as an operating segment, the Motorola Mobile segment revenue for the third quarter of 2014 would have been $1.69 billion, $26 million lower than what was included in net loss from discontinued operations.
Net Income - GAAP consolidated net income in the third quarter of 2014 was $2.81 billion, compared to $2.97 billion in the third quarter of 2013. Non-GAAP consolidated net income was $4.37 billion in the third quarter of 2014, compared to $3.82 billion in the third quarter of 2013. GAAP EPS in the third quarter of 2014 was $4.09 on 688 million diluted shares outstanding, compared to $4.38 in the third quarter of 2013 on 678 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2014 was $6.35, compared to $5.63 in the third quarter of 2013.
Cash Flow and Capital Expenditures - Net cash provided by operating activities in the third quarter of 2014 totaled $5.99 billion, compared to $5.08 billion in the third quarter of 2013. In the third quarter of 2014, capital expenditures were $2.42 billion, the majority of which was for data-center construction, production equipment, and real estate purchases. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the third quarter of 2014, free cash flow was $3.58 billion compared to $2.79 billion in the third quarter of 2013.
We expect to continue to make significant capital expenditures.
A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.
Cash - As of September 30, 2014, cash, cash equivalents, and marketable securities were $62.16 billion, which excludes cash classified as held for sale, compared to $58.72 billion as of December 31, 2013.
Headcount - On a worldwide basis, we employed 55,030 full-time employees (51,564 in Google and 3,466 in Motorola Mobile) as of September 30, 2014, compared to 52,069 full-time employees (48,584 in Google and 3,485 in Motorola Mobile) as of June 30, 2014.
WEBCAST AND CONFERENCE CALL INFORMATION
A live audio webcast of Google's third quarter 2014 earnings release call will be available at http://investor.google.com/webcast.html. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, the financial tables, as well as other supplemental information including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, are also available on that site.
We also announce investor information, including news and commentary about our business and financial performance, SEC filings, notices of investor events and our press and earnings releases, on our investor relations website (http://investor.google.com) and our investor relations Google+ page (https://plus.google.com/+GoogleInvestorRelations/posts).
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that involve risks and uncertainties. These statements include statements regarding our investments in areas of strategic focus, our expected SBC charges, and our plans to make significant capital expenditures. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, unforeseen changes in our hiring patterns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2013 and our most recent Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 which are on file with the SEC and are available on our investor relations website at investor.google.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2014. All information provided in this release and in the attachments is as of October 16, 2014, and we undertake no duty to update this information unless required by law.
ABOUT NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP EPS, free cash flow, and non-GAAP international revenues. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures," "Reconciliation from net cash provided by operating activities to free cash flow," and "Reconciliation from GAAP international revenues to non-GAAP international revenues" included at the end of this release.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results, meaning our operating performance excluding not only non-cash charges, such as SBC, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income excluding expenses related to SBC, and, as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenues. Google considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of SBC, and as applicable, other special items so that Google's management and investors can compare Google's recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Google's management believes that providing a non-GAAP financial measure that excludes SBC allows investors to make meaningful comparisons between Google's recurring core business operating results and those of other companies, as well as providing Google's management with an important tool for financial and operational decision making and for evaluating Google's own recurring core business operating results over different periods of time. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, SBC, that are recurring. SBC has been and will continue to be for the foreseeable future a significant recurring expense in Google's business. Second, SBC is an important part of our employees' compensation. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.
Non-GAAP net income and EPS. We define non-GAAP net income as net income excluding expenses related to SBC and, as applicable, other special items less the related tax effects, as well as net income (loss) from discontinued operations. The tax effects of SBC and, as applicable, other special items are calculated using the tax-deductible portion of SBC, and, as applicable, other special items, and applying the entity-specific, U.S. federal and blended state tax rates. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that Google uses non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with SBC and, as applicable, other special items. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. The same limitations described above regarding Google's use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.
Free cash flow. We define free cash flow as net cash provided by operating activities less capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure and land and buildings, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening the balance sheet. Analysis of free cash flow also facilitates management's comparisons of our operating results to competitors' operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Google is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Our management compensates for this limitation by providing information about our capital expenditures on the face of the statement of cash flows and under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Google has computed free cash flow using the same consistent method from quarter to quarter and year to year.
Non-GAAP international revenues. We define non-GAAP international revenues as international revenues excluding the impact of foreign exchange rate movements and hedging activities. Non-GAAP international revenues are calculated by translating current quarter revenues using prior quarter and prior year exchange rates, as well as excluding any hedging gains realized in the current quarter. We consider non-GAAP international revenues as a useful metric as it facilitates management's internal comparison to our historical performance.
The accompanying tables have more details on the non-GAAP financial measures that are most directly comparable to GAAP financial measures and the related reconciliations between these financial measures.
Contact:
Investor Relations
irgoog@google.com
For Media:
press@google.com
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Wednesday, October 1, 2014
Google News - Investor Relations - Google: Google Announces Date of Third Quarter 2014 Financial Results Conference Call
Google News - Investor Relations - Google
News for Google's Investor Relations
Google Announces Date of Third Quarter 2014 Financial Results Conference Call
https://investor.google.com/releases/2014/1001.html
Oct 1st 2014, 21:36
MOUNTAIN VIEW, Calif. (October 1 2014) – Google Inc. (NASDAQ: GOOG) will hold its quarterly conference call to discuss third quarter 2014 financial results on Thursday, October 16th at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time).
The live webcast of Google's earnings conference call can be accessed at investor.google.com/webcast.html. A replay of the webcast will be available through the same link following the conference call.
Please visit Google's Investor Relations website at investor.google.com on October 16th, 2014 to view the earnings release prior to the conference call.
About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.
Contact
Investor Relations
irgoog@google.com
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News for Google's Investor Relations
Google Announces Date of Third Quarter 2014 Financial Results Conference Call
https://investor.google.com/releases/2014/1001.html
Oct 1st 2014, 21:36
MOUNTAIN VIEW, Calif. (October 1 2014) – Google Inc. (NASDAQ: GOOG) will hold its quarterly conference call to discuss third quarter 2014 financial results on Thursday, October 16th at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time).
The live webcast of Google's earnings conference call can be accessed at investor.google.com/webcast.html. A replay of the webcast will be available through the same link following the conference call.
Please visit Google's Investor Relations website at investor.google.com on October 16th, 2014 to view the earnings release prior to the conference call.
About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.
Contact
Investor Relations
irgoog@google.com
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Thursday, July 17, 2014
Google News - Investor Relations - Google: Google Appoints Alan Mulally to its Board of Directors
Google News - Investor Relations - Google
News for Google's Investor Relations
Google Appoints Alan Mulally to its Board of Directors
http://googlepress.blogspot.com/2014/07/google-appoints-alan-mulally-to-its.html
Jul 17th 2014, 20:10
MOUNTAIN VIEW, CA – JULY 15, 2014 — Google Inc. (NASDAQ: GOOG, GOOGL) today announced it has appointed Alan Mulally to its Board of Directors. A veteran corporate executive of the automotive and aviation industries, Mulally will serve on Google's Audit Committee. His appointment was effective July 9, 2014."Alan brings a wealth of proven business and technology leadership experience," said Larry Page, CEO of Google. "I am so pleased that Alan is now joining Google's board!""I am honored to serve on the board of a global iconic company that is dedicated to enhancing our lives," Mulally said. "I look forward to working together with the Google board and management team to continue to deliver their compelling vision."Mr. Mulally served as President and Chief Executive Officer of Ford Motor Company, a global automotive company, from September 2006 through June 2014. Mulally was previously a member of the board of directors of Ford and served on its finance committee from September 2006 through June 2014.From March 2001 to September 2006, Mr. Mulally served as Executive Vice President of the Boeing Company and President and Chief Executive Officer of Boeing Commercial Airplanes, Inc. He also was a member of the Boeing Executive Council. Prior to that time, he served as President of Boeing's space and defense business.Mr. Mulally served as co-chair of the Washington Competitiveness Council and sat on the advisory boards of NASA, the University of Washington, the University of Kansas, the Massachusetts Institute Technology, and the U.S. Air Force Scientific Advisory Board. He is a member of the U.S. National Academy of Engineering and a fellow of England's Royal Academy of Engineering.Mr. Mulally holds a Bachelor of Science and Master of Science degrees in aeronautical and astronautical engineering from the University of Kansas, and a Master's degree in Management from the Massachusetts Institute of Technology as a 1982 Alfred P. Sloan fellow.About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.Contact
press@google.com
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News for Google's Investor Relations
Google Appoints Alan Mulally to its Board of Directors
http://googlepress.blogspot.com/2014/07/google-appoints-alan-mulally-to-its.html
Jul 17th 2014, 20:10
MOUNTAIN VIEW, CA – JULY 15, 2014 — Google Inc. (NASDAQ: GOOG, GOOGL) today announced it has appointed Alan Mulally to its Board of Directors. A veteran corporate executive of the automotive and aviation industries, Mulally will serve on Google's Audit Committee. His appointment was effective July 9, 2014."Alan brings a wealth of proven business and technology leadership experience," said Larry Page, CEO of Google. "I am so pleased that Alan is now joining Google's board!""I am honored to serve on the board of a global iconic company that is dedicated to enhancing our lives," Mulally said. "I look forward to working together with the Google board and management team to continue to deliver their compelling vision."Mr. Mulally served as President and Chief Executive Officer of Ford Motor Company, a global automotive company, from September 2006 through June 2014. Mulally was previously a member of the board of directors of Ford and served on its finance committee from September 2006 through June 2014.From March 2001 to September 2006, Mr. Mulally served as Executive Vice President of the Boeing Company and President and Chief Executive Officer of Boeing Commercial Airplanes, Inc. He also was a member of the Boeing Executive Council. Prior to that time, he served as President of Boeing's space and defense business.Mr. Mulally served as co-chair of the Washington Competitiveness Council and sat on the advisory boards of NASA, the University of Washington, the University of Kansas, the Massachusetts Institute Technology, and the U.S. Air Force Scientific Advisory Board. He is a member of the U.S. National Academy of Engineering and a fellow of England's Royal Academy of Engineering.Mr. Mulally holds a Bachelor of Science and Master of Science degrees in aeronautical and astronautical engineering from the University of Kansas, and a Master's degree in Management from the Massachusetts Institute of Technology as a 1982 Alfred P. Sloan fellow.About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.Contact
press@google.com
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Google News - Investor Relations - Google: Google Inc. Announces Second Quarter 2014 Results and Management Change
Google News - Investor Relations - Google
News for Google's Investor Relations
Google Inc. Announces Second Quarter 2014 Results and Management Change
https://investor.google.com/earnings/2014/Q2_google_earnings.html
Jul 17th 2014, 20:10
Download press release · Download financial data · Open financial data in new window
MOUNTAIN VIEW, Calif. – July 17, 2014 – Google Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended June 30, 2014.
"Google had a great quarter with revenue up 22% year on year, at $16.0 billion", said Patrick Pichette, CFO of Google. "We are moving forward with great product momentum and are excited to continue providing amazing user experiences, with a view to the long term."
Q2 Financial Summary
On January 29, 2014, we entered into an agreement with Lenovo Group Limited providing for the disposition of the Motorola Mobile business. Financial results of Motorola Mobile are presented as "Net income (loss) from discontinued operations" on the Consolidated Statements of Income for the quarter ended June 30, 2013 and 2014; and assets and liabilities of Motorola Mobile to be disposed of are presented as "Assets held for sale" and "Liabilities held for sale", respectively, on the Consolidated Balance Sheet as of June 30, 2014.
On April 2, 2014, we issued shares of Class C capital stock as a dividend to our stockholders. Except for the number of authorized shares and par value, all references to share and per share amounts have been retroactively restated for all prior periods shown to reflect the stock split, which was effected in the form of a stock dividend.
Google Inc. reported consolidated revenues of $15.96 billion for the quarter ended June 30, 2014, an increase of 22% compared to the second quarter of 2013. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the second quarter of 2014, TAC totaled $3.29 billion, or 23% of advertising revenues.
Operating income, operating margin, net income, and earnings per share (EPS) are reported on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures at the end of this release.
GAAP operating income in the second quarter of 2014 was $4.26 billion, or 27% of revenues. This compares to GAAP operating income of $3.47 billion, or 26% of revenues, in the second quarter of 2013. Non-GAAP operating income in the second quarter of 2014 was $5.14 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.21 billion, or 32% of revenues, in the second quarter of 2013.
GAAP net income (including net income (loss) from discontinued operations) in the second quarter of 2014 was $3.42 billion, compared to $3.23 billion in the second quarter of 2013. Non-GAAP net income in the second quarter of 2014 was $4.18 billion, compared to $3.36 billion in the second quarter of 2013.
GAAP EPS (including impact from net income (loss) from discontinued operations) in the second quarter of 2014 was $4.99 on 686 million diluted shares outstanding, compared to $4.77 in the second quarter of 2013 on 677 million diluted shares outstanding. Non-GAAP EPS in the second quarter of 2014 was $6.08, compared to $4.96 in the second quarter of 2013.
Non-GAAP operating income and non-GAAP operating margin exclude stock-based compensation (SBC) expense. Non-GAAP net income and non-GAAP EPS exclude SBC expense, net of the related tax benefit, as well as net income (loss) from discontinued operations. In the second quarter of 2014, the expense related to SBC and the related tax benefits were $880 million and $195 million compared to $743 million and $160 million in the second quarter of 2013. In addition, net loss from discontinued operations in the second quarter of 2014 was $68 million, compared to net income of $454 million in the second quarter of 2013.
Q2 Financial Highlights
Revenues and other information - Google Inc. revenues for the quarter ended June 30, 2014 were $15.96 billion, representing a 22% increase over second quarter of 2013 revenues of $13.11 billion.
Sites Revenues - Our sites generated revenues of $10.94 billion, or 69% of total revenues, in the second quarter of 2014. This represents a 23% increase over second quarter of 2013 sites revenues of $8.87 billion.
Network Revenues - Our partner sites generated revenues of $3.42 billion, or 21% of total revenues, in the second quarter of 2014. This represents a 7% increase over second quarter of 2013 network revenues of $3.19 billion.
Other Revenues - Other revenues were $1.60 billion, or 10% of total revenues, in the second quarter of 2014. This represents a 53% increase over second quarter of 2013 other revenues of $1.05 billion.
International Revenues - Our revenues from outside of the United States totaled $9.33 billion, representing 58% of total revenues in the second quarter of 2014, compared to 57% in the first quarter of 2014 and 55% in the second quarter of 2013.
Our revenues from the United Kingdom totaled $1.62 billion, representing 10% of total revenues in the second quarter of 2014, compared to 10% in the second quarter of 2013.
Foreign Exchange Impact on Revenues - Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2014 through the second quarter of 2014, our revenues in the second quarter of 2014 would have been $77 million lower. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the second quarter of 2013 through the second quarter of 2014, our revenues in the second quarter of 2014 would have been $120 million lower.
In the second quarter of 2014, we recognized a benefit of $6 million to revenues through our foreign exchange risk management program, compared to $35 million in the second quarter of 2013.
Reconciliations of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues are included at the end of this release.
Paid Clicks - Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 25% over the second quarter of 2013 and increased approximately 2% over the first quarter of 2014. Sites paid clicks, which include clicks related to ads we serve on Google owned and operated properties across different geographies and form factors including search, YouTube engagement ads like TrueView, and other owned and operated properties like Maps and Finance, increased approximately 33% over the second quarter of 2013 and increased approximately 6% over the first quarter of 2014. Network paid clicks, which include clicks related to ads served on non-Google properties participating in our AdSense for Search, AdSense for Content, and AdMob businesses, increased approximately 9% over the second quarter of 2013 and decreased approximately 5% over the first quarter of 2014.
Cost-Per-Click - Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 6% over the second quarter of 2013 and remained constant from the first quarter of 2014. Cost-per-click for Google sites decreased approximately 7% over the second quarter of 2013 and decreased approximately 2% over the first quarter of 2014. Network cost-per-click decreased approximately 13% over the second quarter of 2013 and increased approximately 3% over the first quarter of 2014.
TAC - Traffic acquisition costs, the portion of revenues shared with Google's partners, increased to $3.29 billion in the second quarter of 2014, compared to $3.01 billion in the second quarter of 2013. TAC as a percentage of advertising revenues was 23% in the second quarter of 2014, compared to 25% in the second quarter of 2013.
The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.40 billion in the second quarter of 2014. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $893 million in the second quarter of 2014.
Other Cost of Revenues - Other cost of revenues, which is comprised primarily of data centers operational expenses, hardware inventory costs, amortization of acquisition-related intangible assets, and content acquisition costs, increased to $2.82 billion, or 18% of revenues, in the second quarter of 2014, compared to $2.18 billion, or 17% of revenues, in the second quarter of 2013.
Operating Expenses - Operating expenses, other than cost of revenues, were $5.58 billion in the second quarter of 2014, or 35% of revenues, compared to $4.45 billion in the second quarter of 2013, or 34% of revenues.
Depreciation and loss on disposal of property and equipment and amortization expenses - Depreciation and loss on disposal of property and equipment and amortization expenses were $1.08 billion for the second quarter of 2014, of which $1.07 billion was related to Google, compared to $1.03 billion in the second quarter of 2013. Of the $1.07 billion, $116 million was related to amortization of Motorola intangibles, which Google will retain subsequent to the disposal of Motorola Mobile.
Stock-Based Compensation (SBC) - In the second quarter of 2014, the total charge related to SBC was $880 million compared to $743 million in the second quarter of 2013. We currently estimate SBC charges for grants made to employees prior to June 30, 2014 to be approximately $3.42 billion for 2014. This estimate does not include expenses to be recognized related to employee stock awards that are granted after June 30, 2014 or non-employee stock awards that have been or may be granted.
Operating Income - GAAP operating income in the second quarter of 2014 was $4.26 billion, or 27% of revenues. This compares to GAAP operating income of $3.47 billion, or 26% of revenues, in the second quarter of 2013. Non-GAAP operating income in the second quarter of 2014 was $5.14 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.21 billion, or 32% of revenues, in the second quarter of 2013.
Interest and Other Income, Net - Interest and other income, net, was $145 million in the second quarter of 2014, compared to $236 million in the second quarter of 2013.
Income Taxes - Our effective tax rate was 21% for the second quarter of 2014.
Net Income (Loss) from Discontinued Operations - Net loss from discontinued operations in the second quarter of 2014 was $68 million, compared to net income of $454 million in the second quarter of 2013. Net loss from discontinued operations in the second quarter of 2014 included a pre-tax adjustment of $72 million related to the release of the deferral of certain revenue for the Motorola Mobile segment. Had we presented Motorola Mobile as an operating segment, the Motorola Mobile segment revenue for the second quarter of 2014 would have been $1.73 billion, $72 million lower than what was included in net loss from discontinued operations.
Net Income - GAAP consolidated net income in the second quarter of 2014 was $3.42 billion, compared to $3.23 billion in the second quarter of 2013. Non-GAAP consolidated net income was $4.18 billion in the second quarter of 2014, compared to $3.36 billion in the second quarter of 2013. GAAP EPS in the second quarter of 2014 was $4.99 on 686 million diluted shares outstanding, compared to $4.77 in the second quarter of 2013 on 677 million diluted shares outstanding. Non-GAAP EPS in the second quarter of 2014 was $6.08, compared to $4.96 in the second quarter of 2013.
Cash Flow and Capital Expenditures - Net cash provided by operating activities in the second quarter of 2014 totaled $5.63 billion, compared to $4.71 billion in the second quarter of 2013. In the second quarter of 2014, capital expenditures were $2.65 billion, the majority of which was for data-center construction, real estate purchases, and production equipment. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the second quarter of 2014, free cash flow was $2.98 billion.
We expect to continue to make significant capital expenditures.
A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.
Cash - As of June 30, 2014, cash, cash equivalents, and marketable securities were $61.20 billion, which excludes cash classified as held for sale, compared to $58.72 billion as of December 31, 2013.
Headcount - On a worldwide basis, we employed 52,069 full-time employees (48,584 in Google and 3,485 in Motorola Mobile) as of June 30, 2014, compared to 49,829 full-time employees (46,170 in Google and 3,659 in Motorola Mobile) as of March 31, 2014.
Management Change
Nikesh Arora, our Chief Business Officer, will be leaving Google after almost ten years at the company to join one of our partners, SoftBank, as Vice Chairman of SoftBank Corp. and CEO of SoftBank Internet and Media. He will join this afternoon's earnings call as usual. Omid Kordestani, who was our business founder and led our sales teams for many years, will be stepping in to lead our business organization for now.
WEBCAST AND CONFERENCE CALL INFORMATION
A live audio webcast of Google's second quarter 2014 earnings release call will be available at http://investor.google.com/webcast.html. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, the financial tables, as well as other supplemental information including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, are also available on that site.
We also announce investor information, including news and commentary about our business and financial performance, SEC filings, notices of investor events and our press and earnings releases, on our investor relations website (http://investor.google.com) and our investor relations Google+ page (https://plus.google.com/+GoogleInvestorRelations/posts).
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that involve risks and uncertainties. These statements include statements regarding our investments in areas of strategic focus, our expected SBC charges, and our plans to make significant capital expenditures. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, unforeseen changes in our hiring patterns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2013 and our most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 which are on file with the SEC and are available on our investor relations website at investor.google.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014. All information provided in this release and in the attachments is as of July 17, 2014, and we undertake no duty to update this information unless required by law.
ABOUT NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP EPS, free cash flow, and non-GAAP international revenues. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures," "Reconciliation from net cash provided by operating activities to free cash flow," and "Reconciliation from GAAP international revenues to non-GAAP international revenues" included at the end of this release.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results, meaning our operating performance excluding not only non-cash charges, such as SBC, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income excluding expenses related to SBC, and, as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenues. Google considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of SBC, and as applicable, other special items so that Google's management and investors can compare Google's recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Google's management believes that providing a non-GAAP financial measure that excludes SBC allows investors to make meaningful comparisons between Google's recurring core business operating results and those of other companies, as well as providing Google's management with an important tool for financial and operational decision making and for evaluating Google's own recurring core business operating results over different periods of time. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, SBC, that are recurring. SBC has been and will continue to be for the foreseeable future a significant recurring expense in Google's business. Second, SBC is an important part of our employees' compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.
Non-GAAP net income and EPS. We define non-GAAP net income as net income excluding expenses related to SBC and, as applicable, other special items less the related tax effects, as well as net income (loss) from discontinued operations. The tax effects of SBC and, as applicable, other special items are calculated using the tax-deductible portion of SBC, and, as applicable, other special items, and applying the entity-specific, U.S. federal and blended state tax rates. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that Google uses non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with SBC and, as applicable, other special items. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. The same limitations described above regarding Google's use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.
Free cash flow. We define free cash flow as net cash provided by operating activities less capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure and land and buildings, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening the balance sheet. Analysis of free cash flow also facilitates management's comparisons of our operating results to competitors' operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Google is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Our management compensates for this limitation by providing information about our capital expenditures on the face of the statement of cash flows and under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Google has computed free cash flow using the same consistent method from quarter to quarter and year to year.
Non-GAAP international revenues. We define non-GAAP international revenues as international revenues excluding the impact of foreign exchange rate movements and hedging activities. Non-GAAP international revenues are calculated by translating current quarter revenues using prior quarter and prior year exchange rates, as well as excluding any hedging gains realized in the current quarter. We consider non-GAAP international revenues as a useful metric as it facilitates management's internal comparison to our historical performance.
The accompanying tables have more details on the non-GAAP financial measures that are most directly comparable to GAAP financial measures and the related reconciliations between these financial measures.
Contact:
Investor Relations
irgoog@google.com
For Media:
press@google.com
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News for Google's Investor Relations
Google Inc. Announces Second Quarter 2014 Results and Management Change
https://investor.google.com/earnings/2014/Q2_google_earnings.html
Jul 17th 2014, 20:10
Download press release · Download financial data · Open financial data in new window
MOUNTAIN VIEW, Calif. – July 17, 2014 – Google Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended June 30, 2014.
"Google had a great quarter with revenue up 22% year on year, at $16.0 billion", said Patrick Pichette, CFO of Google. "We are moving forward with great product momentum and are excited to continue providing amazing user experiences, with a view to the long term."
Q2 Financial Summary
On January 29, 2014, we entered into an agreement with Lenovo Group Limited providing for the disposition of the Motorola Mobile business. Financial results of Motorola Mobile are presented as "Net income (loss) from discontinued operations" on the Consolidated Statements of Income for the quarter ended June 30, 2013 and 2014; and assets and liabilities of Motorola Mobile to be disposed of are presented as "Assets held for sale" and "Liabilities held for sale", respectively, on the Consolidated Balance Sheet as of June 30, 2014.
On April 2, 2014, we issued shares of Class C capital stock as a dividend to our stockholders. Except for the number of authorized shares and par value, all references to share and per share amounts have been retroactively restated for all prior periods shown to reflect the stock split, which was effected in the form of a stock dividend.
Google Inc. reported consolidated revenues of $15.96 billion for the quarter ended June 30, 2014, an increase of 22% compared to the second quarter of 2013. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the second quarter of 2014, TAC totaled $3.29 billion, or 23% of advertising revenues.
Operating income, operating margin, net income, and earnings per share (EPS) are reported on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures at the end of this release.
GAAP operating income in the second quarter of 2014 was $4.26 billion, or 27% of revenues. This compares to GAAP operating income of $3.47 billion, or 26% of revenues, in the second quarter of 2013. Non-GAAP operating income in the second quarter of 2014 was $5.14 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.21 billion, or 32% of revenues, in the second quarter of 2013.
GAAP net income (including net income (loss) from discontinued operations) in the second quarter of 2014 was $3.42 billion, compared to $3.23 billion in the second quarter of 2013. Non-GAAP net income in the second quarter of 2014 was $4.18 billion, compared to $3.36 billion in the second quarter of 2013.
GAAP EPS (including impact from net income (loss) from discontinued operations) in the second quarter of 2014 was $4.99 on 686 million diluted shares outstanding, compared to $4.77 in the second quarter of 2013 on 677 million diluted shares outstanding. Non-GAAP EPS in the second quarter of 2014 was $6.08, compared to $4.96 in the second quarter of 2013.
Non-GAAP operating income and non-GAAP operating margin exclude stock-based compensation (SBC) expense. Non-GAAP net income and non-GAAP EPS exclude SBC expense, net of the related tax benefit, as well as net income (loss) from discontinued operations. In the second quarter of 2014, the expense related to SBC and the related tax benefits were $880 million and $195 million compared to $743 million and $160 million in the second quarter of 2013. In addition, net loss from discontinued operations in the second quarter of 2014 was $68 million, compared to net income of $454 million in the second quarter of 2013.
Q2 Financial Highlights
Revenues and other information - Google Inc. revenues for the quarter ended June 30, 2014 were $15.96 billion, representing a 22% increase over second quarter of 2013 revenues of $13.11 billion.
Sites Revenues - Our sites generated revenues of $10.94 billion, or 69% of total revenues, in the second quarter of 2014. This represents a 23% increase over second quarter of 2013 sites revenues of $8.87 billion.
Network Revenues - Our partner sites generated revenues of $3.42 billion, or 21% of total revenues, in the second quarter of 2014. This represents a 7% increase over second quarter of 2013 network revenues of $3.19 billion.
Other Revenues - Other revenues were $1.60 billion, or 10% of total revenues, in the second quarter of 2014. This represents a 53% increase over second quarter of 2013 other revenues of $1.05 billion.
International Revenues - Our revenues from outside of the United States totaled $9.33 billion, representing 58% of total revenues in the second quarter of 2014, compared to 57% in the first quarter of 2014 and 55% in the second quarter of 2013.
Our revenues from the United Kingdom totaled $1.62 billion, representing 10% of total revenues in the second quarter of 2014, compared to 10% in the second quarter of 2013.
Foreign Exchange Impact on Revenues - Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2014 through the second quarter of 2014, our revenues in the second quarter of 2014 would have been $77 million lower. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the second quarter of 2013 through the second quarter of 2014, our revenues in the second quarter of 2014 would have been $120 million lower.
In the second quarter of 2014, we recognized a benefit of $6 million to revenues through our foreign exchange risk management program, compared to $35 million in the second quarter of 2013.
Reconciliations of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues are included at the end of this release.
Paid Clicks - Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 25% over the second quarter of 2013 and increased approximately 2% over the first quarter of 2014. Sites paid clicks, which include clicks related to ads we serve on Google owned and operated properties across different geographies and form factors including search, YouTube engagement ads like TrueView, and other owned and operated properties like Maps and Finance, increased approximately 33% over the second quarter of 2013 and increased approximately 6% over the first quarter of 2014. Network paid clicks, which include clicks related to ads served on non-Google properties participating in our AdSense for Search, AdSense for Content, and AdMob businesses, increased approximately 9% over the second quarter of 2013 and decreased approximately 5% over the first quarter of 2014.
Cost-Per-Click - Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 6% over the second quarter of 2013 and remained constant from the first quarter of 2014. Cost-per-click for Google sites decreased approximately 7% over the second quarter of 2013 and decreased approximately 2% over the first quarter of 2014. Network cost-per-click decreased approximately 13% over the second quarter of 2013 and increased approximately 3% over the first quarter of 2014.
TAC - Traffic acquisition costs, the portion of revenues shared with Google's partners, increased to $3.29 billion in the second quarter of 2014, compared to $3.01 billion in the second quarter of 2013. TAC as a percentage of advertising revenues was 23% in the second quarter of 2014, compared to 25% in the second quarter of 2013.
The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.40 billion in the second quarter of 2014. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $893 million in the second quarter of 2014.
Other Cost of Revenues - Other cost of revenues, which is comprised primarily of data centers operational expenses, hardware inventory costs, amortization of acquisition-related intangible assets, and content acquisition costs, increased to $2.82 billion, or 18% of revenues, in the second quarter of 2014, compared to $2.18 billion, or 17% of revenues, in the second quarter of 2013.
Operating Expenses - Operating expenses, other than cost of revenues, were $5.58 billion in the second quarter of 2014, or 35% of revenues, compared to $4.45 billion in the second quarter of 2013, or 34% of revenues.
Depreciation and loss on disposal of property and equipment and amortization expenses - Depreciation and loss on disposal of property and equipment and amortization expenses were $1.08 billion for the second quarter of 2014, of which $1.07 billion was related to Google, compared to $1.03 billion in the second quarter of 2013. Of the $1.07 billion, $116 million was related to amortization of Motorola intangibles, which Google will retain subsequent to the disposal of Motorola Mobile.
Stock-Based Compensation (SBC) - In the second quarter of 2014, the total charge related to SBC was $880 million compared to $743 million in the second quarter of 2013. We currently estimate SBC charges for grants made to employees prior to June 30, 2014 to be approximately $3.42 billion for 2014. This estimate does not include expenses to be recognized related to employee stock awards that are granted after June 30, 2014 or non-employee stock awards that have been or may be granted.
Operating Income - GAAP operating income in the second quarter of 2014 was $4.26 billion, or 27% of revenues. This compares to GAAP operating income of $3.47 billion, or 26% of revenues, in the second quarter of 2013. Non-GAAP operating income in the second quarter of 2014 was $5.14 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.21 billion, or 32% of revenues, in the second quarter of 2013.
Interest and Other Income, Net - Interest and other income, net, was $145 million in the second quarter of 2014, compared to $236 million in the second quarter of 2013.
Income Taxes - Our effective tax rate was 21% for the second quarter of 2014.
Net Income (Loss) from Discontinued Operations - Net loss from discontinued operations in the second quarter of 2014 was $68 million, compared to net income of $454 million in the second quarter of 2013. Net loss from discontinued operations in the second quarter of 2014 included a pre-tax adjustment of $72 million related to the release of the deferral of certain revenue for the Motorola Mobile segment. Had we presented Motorola Mobile as an operating segment, the Motorola Mobile segment revenue for the second quarter of 2014 would have been $1.73 billion, $72 million lower than what was included in net loss from discontinued operations.
Net Income - GAAP consolidated net income in the second quarter of 2014 was $3.42 billion, compared to $3.23 billion in the second quarter of 2013. Non-GAAP consolidated net income was $4.18 billion in the second quarter of 2014, compared to $3.36 billion in the second quarter of 2013. GAAP EPS in the second quarter of 2014 was $4.99 on 686 million diluted shares outstanding, compared to $4.77 in the second quarter of 2013 on 677 million diluted shares outstanding. Non-GAAP EPS in the second quarter of 2014 was $6.08, compared to $4.96 in the second quarter of 2013.
Cash Flow and Capital Expenditures - Net cash provided by operating activities in the second quarter of 2014 totaled $5.63 billion, compared to $4.71 billion in the second quarter of 2013. In the second quarter of 2014, capital expenditures were $2.65 billion, the majority of which was for data-center construction, real estate purchases, and production equipment. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the second quarter of 2014, free cash flow was $2.98 billion.
We expect to continue to make significant capital expenditures.
A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.
Cash - As of June 30, 2014, cash, cash equivalents, and marketable securities were $61.20 billion, which excludes cash classified as held for sale, compared to $58.72 billion as of December 31, 2013.
Headcount - On a worldwide basis, we employed 52,069 full-time employees (48,584 in Google and 3,485 in Motorola Mobile) as of June 30, 2014, compared to 49,829 full-time employees (46,170 in Google and 3,659 in Motorola Mobile) as of March 31, 2014.
Management Change
Nikesh Arora, our Chief Business Officer, will be leaving Google after almost ten years at the company to join one of our partners, SoftBank, as Vice Chairman of SoftBank Corp. and CEO of SoftBank Internet and Media. He will join this afternoon's earnings call as usual. Omid Kordestani, who was our business founder and led our sales teams for many years, will be stepping in to lead our business organization for now.
WEBCAST AND CONFERENCE CALL INFORMATION
A live audio webcast of Google's second quarter 2014 earnings release call will be available at http://investor.google.com/webcast.html. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, the financial tables, as well as other supplemental information including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, are also available on that site.
We also announce investor information, including news and commentary about our business and financial performance, SEC filings, notices of investor events and our press and earnings releases, on our investor relations website (http://investor.google.com) and our investor relations Google+ page (https://plus.google.com/+GoogleInvestorRelations/posts).
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that involve risks and uncertainties. These statements include statements regarding our investments in areas of strategic focus, our expected SBC charges, and our plans to make significant capital expenditures. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, unforeseen changes in our hiring patterns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2013 and our most recent Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 which are on file with the SEC and are available on our investor relations website at investor.google.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014. All information provided in this release and in the attachments is as of July 17, 2014, and we undertake no duty to update this information unless required by law.
ABOUT NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP EPS, free cash flow, and non-GAAP international revenues. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures," "Reconciliation from net cash provided by operating activities to free cash flow," and "Reconciliation from GAAP international revenues to non-GAAP international revenues" included at the end of this release.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results, meaning our operating performance excluding not only non-cash charges, such as SBC, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income excluding expenses related to SBC, and, as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenues. Google considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of SBC, and as applicable, other special items so that Google's management and investors can compare Google's recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Google's management believes that providing a non-GAAP financial measure that excludes SBC allows investors to make meaningful comparisons between Google's recurring core business operating results and those of other companies, as well as providing Google's management with an important tool for financial and operational decision making and for evaluating Google's own recurring core business operating results over different periods of time. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, SBC, that are recurring. SBC has been and will continue to be for the foreseeable future a significant recurring expense in Google's business. Second, SBC is an important part of our employees' compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.
Non-GAAP net income and EPS. We define non-GAAP net income as net income excluding expenses related to SBC and, as applicable, other special items less the related tax effects, as well as net income (loss) from discontinued operations. The tax effects of SBC and, as applicable, other special items are calculated using the tax-deductible portion of SBC, and, as applicable, other special items, and applying the entity-specific, U.S. federal and blended state tax rates. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that Google uses non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with SBC and, as applicable, other special items. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. The same limitations described above regarding Google's use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.
Free cash flow. We define free cash flow as net cash provided by operating activities less capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure and land and buildings, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening the balance sheet. Analysis of free cash flow also facilitates management's comparisons of our operating results to competitors' operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Google is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Our management compensates for this limitation by providing information about our capital expenditures on the face of the statement of cash flows and under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Google has computed free cash flow using the same consistent method from quarter to quarter and year to year.
Non-GAAP international revenues. We define non-GAAP international revenues as international revenues excluding the impact of foreign exchange rate movements and hedging activities. Non-GAAP international revenues are calculated by translating current quarter revenues using prior quarter and prior year exchange rates, as well as excluding any hedging gains realized in the current quarter. We consider non-GAAP international revenues as a useful metric as it facilitates management's internal comparison to our historical performance.
The accompanying tables have more details on the non-GAAP financial measures that are most directly comparable to GAAP financial measures and the related reconciliations between these financial measures.
Contact:
Investor Relations
irgoog@google.com
For Media:
press@google.com
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Monday, June 30, 2014
Google News - Investor Relations - Google: Google Announces Date of Second Quarter 2014 Financial Results Conference Call
Google News - Investor Relations - Google
News for Google's Investor Relations
Google Announces Date of Second Quarter 2014 Financial Results Conference Call
https://investor.google.com/releases/2014/0630.html
Jun 30th 2014, 20:48
MOUNTAIN VIEW, Calif. (June 30 2014) – Google Inc. (NASDAQ: GOOG) will hold its quarterly conference call to discuss second quarter 2014 financial results on Thursday, July 17th at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time).
The live webcast of Google's earnings conference call can be accessed at investor.google.com/webcast.html. A replay of the webcast will be available through the same link following the conference call.
Please visit Google's Investor Relations website at investor.google.com on July 17th, 2014 to view the earnings release prior to the conference call.
About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.
Contact
Julia Duncan
Investor Relations
juliaduncan@google.com
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News for Google's Investor Relations
Google Announces Date of Second Quarter 2014 Financial Results Conference Call
https://investor.google.com/releases/2014/0630.html
Jun 30th 2014, 20:48
MOUNTAIN VIEW, Calif. (June 30 2014) – Google Inc. (NASDAQ: GOOG) will hold its quarterly conference call to discuss second quarter 2014 financial results on Thursday, July 17th at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time).
The live webcast of Google's earnings conference call can be accessed at investor.google.com/webcast.html. A replay of the webcast will be available through the same link following the conference call.
Please visit Google's Investor Relations website at investor.google.com on July 17th, 2014 to view the earnings release prior to the conference call.
About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.
Contact
Julia Duncan
Investor Relations
juliaduncan@google.com
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Google News - Investor Relations - Google: Google and Skybox Imaging Sign Acquisition Agreement
Google News - Investor Relations - Google
News for Google's Investor Relations
Google and Skybox Imaging Sign Acquisition Agreement
https://investor.google.com/releases/2014/0609.html
Jun 30th 2014, 20:48
MOUNTAIN VIEW, CA – JUNE 10, 2014— Google Inc. (NASDAQ: GOOG) announced today that it has entered into an agreement to buy Skybox Imaging for $500 million in cash, subject to adjustments.
Skybox's satellites will help keep Google Maps accurate with up-to-date imagery. Over time, we also hope that Skybox's team and technology will be able to help improve Internet access and disaster relief — areas Google has long been interested in.
The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the US.
About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.
Contact
press@google.com
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News for Google's Investor Relations
Google and Skybox Imaging Sign Acquisition Agreement
https://investor.google.com/releases/2014/0609.html
Jun 30th 2014, 20:48
MOUNTAIN VIEW, CA – JUNE 10, 2014— Google Inc. (NASDAQ: GOOG) announced today that it has entered into an agreement to buy Skybox Imaging for $500 million in cash, subject to adjustments.
Skybox's satellites will help keep Google Maps accurate with up-to-date imagery. Over time, we also hope that Skybox's team and technology will be able to help improve Internet access and disaster relief — areas Google has long been interested in.
The transaction is subject to customary closing conditions, including the receipt of regulatory approvals in the US.
About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.
Contact
press@google.com
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Wednesday, May 14, 2014
Google News - Investor Relations - Google: 2013 Founders’ Letter
Google News - Investor Relations - Google
News for Google's Investor Relations
2013 Founders' Letter
https://investor.google.com/corporate/2013/founders-letter.html
May 14th 2014, 18:09
Sergey and I started Google because we wanted "to develop services that significantly improve the lives of as many people as possible" (Founders' IPO Letter, 2004). We've stayed true to that mission, placing long-term bets on new technologies that users truly love—from Search to Gmail, Maps, Chrome, YouTube, and Android. We've covered a lot of ground in a short space of time and so people naturally ask, what is Google today, and where are you heading? It's a good question.
Search on…
Information is Google's core. We're motivated by a profound belief that access to knowledge will improve humankind. As kids, we were both quite curious. I remember spending a huge amount of time poring over books and magazines, or taking things apart at home to figure out how they worked. Today, it's much easier to find out about stuff. You just go to Google and start searching. Search is so meaningful because even a little bit of knowledge can make a tremendous difference—whether it's something seemingly small but important in everyday life, like avoiding traffic, or something bigger, like this farmer in Africa who figured out how to save his potato crop.
The activity on Google Search is astounding. There are over 100 billion searches a month (a whopping 15 percent of which we've never seen before), and we now update our index within seconds to ensure we show the freshest results. To make life easier, we're increasingly able to provide direct answers to your questions. For example, "what's the deepest lake in the world?" (It's Lake Baikal in Siberia at 1,741 meters) or, "when does my flight leave?" or, "how many calories in a pancake?" And, I am excited by the progress we have made with Voice Search, which now works in over 38 languages, including, most recently, Thai and Vietnamese. Speaking is often the quickest, easiest way to ask, especially if you're using a mobile device.
Yet, in many ways, we're a million miles away from creating the search engine of my dreams, one that gets you just the right information at the exact moment you need it with almost no effort. That's partly because understanding information in a deep way is a hard problem to solve. Google Now is starting to tackle this challenge. It provides information without you even having to ask, so no more digging around in your inbox to find the tracking number for a much-needed delivery; it's already there on your screen. And recommendations on Google+, which are based on your interests, have also become a great source of information. I get things that are highly relevant all the time, like this YouTube video about the history of kitesurfing that appeared in my stream recently.
While it is still early days, we've also made significant progress understanding people's context, which is crucial if we are to improve human-computer interaction. Think about your commute. You need the traffic information very accessible so you can plan for it, or avoid it altogether. If you're going to another appointment, you want the directions to start from where you are at that moment (rather than having to type in your location on a small screen). Improved context will also help make search more natural, and not a series of keywords you artificially type into a computer. We're getting closer: ask how tall the Eiffel Tower is, and then when "it" was built. By understanding what "it" means in different contexts, we can make search conversational.
Living in a multi-screen world
As devices proliferate, it becomes more and more important to ensure that you can navigate effortlessly across them. Our Chrome browser, which has over 750 million users and is super fast and secure, works seamlessly across devices. Open a map on your desktop; when you switch to your mobile device, the same tab will be open so you can pick up right where you left off.
Think about photos: they are a really great use case for how bad things can be in a multi-screen world. We've all suffered the frustration of having our photos marooned on different devices, making them hard to find, let alone share. G+ instantly uploads them to the web, so you can view them from any device. Better still, if you lose your phone, your photos don't get lost, too.
In less than six years, over one billion Android devices have been activated (and growing fast)—creating an amazing platform for the increasing number of app developers globally. It's super exciting to see this ecosystem take off, with Android developers earning four times more on average in 2013 than they did the year before from user payments. We're now taking Android to wearables, like watches, and to cars, where we can make it super easy to get directions, make a call or play music.
The idea behind Google Play is similar, in that you can get apps, movies, books and music from one place, and play them on any device without the need for endless syncing. Start listening to a song on your tablet and when you switch to your mobile it will be there (as you can see there is a theme emerging here!). And most recently with Chromecast, we've made it easy to watch movies from Google Play or Netflix on your TV screen at home or at a friend's apartment. You can throw away all your remotes and just use your phone or tablet to control your TV in the apps you are already used to—like YouTube. Best of all, it costs just $35.
Now, none of this matters without good design. I remember taking a class at the University of Michigan on usability. Students had to pick a program they knew really well (I chose an email program) and estimate how long it would take experts to perform different tasks. It really helped me understand that building good, efficient interfaces is hard, and a bit more like engineering than you might think. Another tab here, another drop-down menu there. The more choices you throw at people (even if they never use them), the longer it takes them to get stuff done. People still talk about the simplicity of the Google homepage, and that was a huge part of our original success. There's no reason the same principles can't apply across our products, especially now, with so many devices and options, and so much opportunity for distraction.
Access is an unsolved problem
Of course, this all assumes you are one of the two billion people who have access to the Internet. That leaves five billion other people. It's a tragedy that with so much information available today, two-thirds of the world's population lack even the most basic Internet connection. That's why I'm so excited the team has gotten Project Loon off the ground (literally). The idea is to create a network of balloons on the very edge of space (they fly about twice the altitude of commercial airlines) that can provide connectivity in rural and remote areas. Soon there will be a classroom in northeast Brazil we are working to put online for the first time, using Loon. And as the program expands, we hope to bring the power of connection to more and more people—creating opportunities that none of us have yet imagined.
Invention and reinvention
It's amazing what you can achieve with a small dedicated team when you start from first principles and aren't encumbered by the established way of doing things. Yet I've learned over time that it's surprisingly difficult to get teams to be super ambitious because most people haven't been educated in this kind of moonshot thinking. They tend to assume that things are impossible, or get frightened of failure. It's why we've put so much energy into hiring independent thinkers at Google, and setting big goals. Because if you hire the right people and have bold enough dreams, you'll usually get there. And even if you fail, you'll probably learn something important.
It's also true that over time many companies get comfortable doing what they have always done, with a few incremental changes. This kind of incrementalism leads to irrelevance over time, especially in technology, because change tends to be revolutionary, not evolutionary. It's why we continue to invest for the long term, in our next generation of big bets. In healthcare we have Calico—a new company led by the former CEO of Genentech, Art Levinson, that's focused on health, wellbeing and longevity—and Iris, a smart contact lens designed to transform the lives of people with diabetes. We also recently acquired Nest, a company that's taken unloved household products like thermostats and made them much more useful. And we're excited about our new Google Shopping Express service, which is a great way to get deliveries the same day you order them, and self-driving cars (no explanation needed!). These seem like pretty crazy ideas today, but if the past is any indicator of our future success, today's big bets won't seem so wild in a few years' time.
Sixteen years after we started Google, we're just scratching the surface of what's possible. Sergey and I come to work each day excited about what lies ahead and the extraordinary people we work with. Googlers make everything possible, and they are our future. And, while the world may have changed over the years, we're as motivated by the potential to make a difference in people's lives today as when we first started.
Larry Page
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News for Google's Investor Relations
2013 Founders' Letter
https://investor.google.com/corporate/2013/founders-letter.html
May 14th 2014, 18:09
Sergey and I started Google because we wanted "to develop services that significantly improve the lives of as many people as possible" (Founders' IPO Letter, 2004). We've stayed true to that mission, placing long-term bets on new technologies that users truly love—from Search to Gmail, Maps, Chrome, YouTube, and Android. We've covered a lot of ground in a short space of time and so people naturally ask, what is Google today, and where are you heading? It's a good question.
Search on…
Information is Google's core. We're motivated by a profound belief that access to knowledge will improve humankind. As kids, we were both quite curious. I remember spending a huge amount of time poring over books and magazines, or taking things apart at home to figure out how they worked. Today, it's much easier to find out about stuff. You just go to Google and start searching. Search is so meaningful because even a little bit of knowledge can make a tremendous difference—whether it's something seemingly small but important in everyday life, like avoiding traffic, or something bigger, like this farmer in Africa who figured out how to save his potato crop.
The activity on Google Search is astounding. There are over 100 billion searches a month (a whopping 15 percent of which we've never seen before), and we now update our index within seconds to ensure we show the freshest results. To make life easier, we're increasingly able to provide direct answers to your questions. For example, "what's the deepest lake in the world?" (It's Lake Baikal in Siberia at 1,741 meters) or, "when does my flight leave?" or, "how many calories in a pancake?" And, I am excited by the progress we have made with Voice Search, which now works in over 38 languages, including, most recently, Thai and Vietnamese. Speaking is often the quickest, easiest way to ask, especially if you're using a mobile device.
Yet, in many ways, we're a million miles away from creating the search engine of my dreams, one that gets you just the right information at the exact moment you need it with almost no effort. That's partly because understanding information in a deep way is a hard problem to solve. Google Now is starting to tackle this challenge. It provides information without you even having to ask, so no more digging around in your inbox to find the tracking number for a much-needed delivery; it's already there on your screen. And recommendations on Google+, which are based on your interests, have also become a great source of information. I get things that are highly relevant all the time, like this YouTube video about the history of kitesurfing that appeared in my stream recently.
While it is still early days, we've also made significant progress understanding people's context, which is crucial if we are to improve human-computer interaction. Think about your commute. You need the traffic information very accessible so you can plan for it, or avoid it altogether. If you're going to another appointment, you want the directions to start from where you are at that moment (rather than having to type in your location on a small screen). Improved context will also help make search more natural, and not a series of keywords you artificially type into a computer. We're getting closer: ask how tall the Eiffel Tower is, and then when "it" was built. By understanding what "it" means in different contexts, we can make search conversational.
Living in a multi-screen world
As devices proliferate, it becomes more and more important to ensure that you can navigate effortlessly across them. Our Chrome browser, which has over 750 million users and is super fast and secure, works seamlessly across devices. Open a map on your desktop; when you switch to your mobile device, the same tab will be open so you can pick up right where you left off.
Think about photos: they are a really great use case for how bad things can be in a multi-screen world. We've all suffered the frustration of having our photos marooned on different devices, making them hard to find, let alone share. G+ instantly uploads them to the web, so you can view them from any device. Better still, if you lose your phone, your photos don't get lost, too.
In less than six years, over one billion Android devices have been activated (and growing fast)—creating an amazing platform for the increasing number of app developers globally. It's super exciting to see this ecosystem take off, with Android developers earning four times more on average in 2013 than they did the year before from user payments. We're now taking Android to wearables, like watches, and to cars, where we can make it super easy to get directions, make a call or play music.
The idea behind Google Play is similar, in that you can get apps, movies, books and music from one place, and play them on any device without the need for endless syncing. Start listening to a song on your tablet and when you switch to your mobile it will be there (as you can see there is a theme emerging here!). And most recently with Chromecast, we've made it easy to watch movies from Google Play or Netflix on your TV screen at home or at a friend's apartment. You can throw away all your remotes and just use your phone or tablet to control your TV in the apps you are already used to—like YouTube. Best of all, it costs just $35.
Now, none of this matters without good design. I remember taking a class at the University of Michigan on usability. Students had to pick a program they knew really well (I chose an email program) and estimate how long it would take experts to perform different tasks. It really helped me understand that building good, efficient interfaces is hard, and a bit more like engineering than you might think. Another tab here, another drop-down menu there. The more choices you throw at people (even if they never use them), the longer it takes them to get stuff done. People still talk about the simplicity of the Google homepage, and that was a huge part of our original success. There's no reason the same principles can't apply across our products, especially now, with so many devices and options, and so much opportunity for distraction.
Access is an unsolved problem
Of course, this all assumes you are one of the two billion people who have access to the Internet. That leaves five billion other people. It's a tragedy that with so much information available today, two-thirds of the world's population lack even the most basic Internet connection. That's why I'm so excited the team has gotten Project Loon off the ground (literally). The idea is to create a network of balloons on the very edge of space (they fly about twice the altitude of commercial airlines) that can provide connectivity in rural and remote areas. Soon there will be a classroom in northeast Brazil we are working to put online for the first time, using Loon. And as the program expands, we hope to bring the power of connection to more and more people—creating opportunities that none of us have yet imagined.
Invention and reinvention
It's amazing what you can achieve with a small dedicated team when you start from first principles and aren't encumbered by the established way of doing things. Yet I've learned over time that it's surprisingly difficult to get teams to be super ambitious because most people haven't been educated in this kind of moonshot thinking. They tend to assume that things are impossible, or get frightened of failure. It's why we've put so much energy into hiring independent thinkers at Google, and setting big goals. Because if you hire the right people and have bold enough dreams, you'll usually get there. And even if you fail, you'll probably learn something important.
It's also true that over time many companies get comfortable doing what they have always done, with a few incremental changes. This kind of incrementalism leads to irrelevance over time, especially in technology, because change tends to be revolutionary, not evolutionary. It's why we continue to invest for the long term, in our next generation of big bets. In healthcare we have Calico—a new company led by the former CEO of Genentech, Art Levinson, that's focused on health, wellbeing and longevity—and Iris, a smart contact lens designed to transform the lives of people with diabetes. We also recently acquired Nest, a company that's taken unloved household products like thermostats and made them much more useful. And we're excited about our new Google Shopping Express service, which is a great way to get deliveries the same day you order them, and self-driving cars (no explanation needed!). These seem like pretty crazy ideas today, but if the past is any indicator of our future success, today's big bets won't seem so wild in a few years' time.
Sixteen years after we started Google, we're just scratching the surface of what's possible. Sergey and I come to work each day excited about what lies ahead and the extraordinary people we work with. Googlers make everything possible, and they are our future. And, while the world may have changed over the years, we're as motivated by the potential to make a difference in people's lives today as when we first started.
Larry Page
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Wednesday, April 16, 2014
Google News - Investor Relations - Google: Google Inc. Announces First Quarter 2014 Results
Google News - Investor Relations - Google
News for Google's Investor Relations
Google Inc. Announces First Quarter 2014 Results
https://investor.google.com/earnings/2014/Q1_google_earnings.html
Apr 16th 2014, 20:07
Download press release · Download financial data · Open financial data in new window
MOUNTAIN VIEW, Calif. – April 16, 2014 – Google Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended March 31, 2014.
"We completed another great quarter. Google's revenue was $15.4 billion, up 19% year on year", said Larry Page, CEO of Google. "We got lots of product improvements done, especially on mobile. I'm also excited with progress on our emerging businesses."
Q1 Financial Summary
On January 29, 2014, we entered into an agreement with Lenovo Group Limited providing for the disposition of the Motorola Mobile business. As such, financial results of Motorola Mobile are presented as "Net loss from discontinued operations" on the Consolidated Statements of Income for the quarter ended March 31, 2013 and 2014; and assets and liabilities of Motorola Mobile to be disposed of are presented as "Assets held for sale" and "Liabilities held for sale", respectively, on the Consolidated Balance Sheet as of March 31, 2014.
On April 2, 2014, we issued shares of Class C capital stock as a dividend to our stockholders. Except for the number of authorized shares and par value, all references to share and per share amounts have been retroactively restated for all prior periods shown to reflect the stock split, which was effected in the form of a stock dividend.
Google Inc. reported consolidated revenues of $15.42 billion for the quarter ended March 31, 2014, an increase of 19% compared to the first quarter of 2013. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the first quarter of 2014, TAC totaled $3.23 billion, or 23% of advertising revenues.
Operating income, operating margin, net income, and earnings per share (EPS) are reported on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures at the end of this release.
GAAP operating income in the first quarter of 2014 was $4.12 billion, or 27% of revenues. This compares to GAAP operating income of $3.75 billion, or 29% of revenues, in the first quarter of 2013. Non-GAAP operating income in the first quarter of 2014 was $4.95 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.40 billion, or 34% of revenues, in the first quarter of 2013.
GAAP net income (including net loss from discontinued operations) in the first quarter of 2014 was $3.45 billion, compared to $3.35 billion in the first quarter of 2013. Non-GAAP net income in the first quarter of 2014 was $4.30 billion, compared to $4.04 billion in the first quarter of 2013.
GAAP EPS (including impact from net loss from discontinued operations) in the first quarter of 2014 was $5.04 on 685 million diluted shares outstanding, compared to $4.97 in the first quarter of 2013 on 673 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2014 was $6.27, compared to $6.00 in the first quarter of 2013.
Non-GAAP operating income and non-GAAP operating margin exclude stock-based compensation (SBC) expense. Non-GAAP net income and non-GAAP EPS exclude SBC expense, net of the related tax benefit, as well as net loss from discontinued operations. In the first quarter of 2014, the expense related to SBC and the related tax benefits were $839 million and $190 million compared to $655 million and $141 million in the first quarter of 2013. In addition, net loss from discontinued operations in the first quarter of 2014 was $198 million, compared to $182 million in the first quarter of 2013.
Q1 Financial Highlights
Revenues and other information - Google Inc. revenues for the quarter ended March 31, 2014 were $15.42 billion, representing a 19% increase over first quarter of 2013 revenues of $12.95 billion.
Sites Revenues - Our sites generated revenues of $10.47 billion, or 68% of total revenues, in the first quarter of 2014. This represents a 21% increase over first quarter of 2013 sites revenues of $8.64 billion.
Network Revenues - Our partner sites generated revenues of $3.40 billion, or 22% of total revenues, in the first quarter of 2014. This represents a 4% increase over first quarter of 2013 network revenues of $3.26 billion.
Other Revenues - Other revenues were $1.55 billion, or 10% of total revenues, in the first quarter of 2014. This represents a 48% increase over first quarter of 2013 other revenues of $1.05 billion.
International Revenues - Our revenues from outside of the United States totaled $8.76 billion, representing 57% of total revenues in the first quarter of 2014, compared to 56% in the fourth quarter of 2013 and 55% in the first quarter of 2013.
Our revenues from the United Kingdom totaled $1.58 billion, representing 10% of total revenues in the first quarter of 2014, compared to 11% in the first quarter of 2013.
Foreign Exchange Impact on Revenues - Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2013 through the first quarter of 2014, our revenues in the first quarter of 2014 would have been $50 million higher. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2013 through the first quarter of 2014, our revenues in the first quarter of 2014 would have been $163 million higher.
In the first quarter of 2014, we recognized a benefit of $8 million to revenues through our foreign exchange risk management program, compared to $35 million in the first quarter of 2013.
Reconciliations of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues are included at the end of this release.
Paid Clicks - Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 26% over the first quarter of 2013 and decreased approximately 1% over the fourth quarter of 2013.
Cost-Per-Click - Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 9% over the first quarter of 2013 and remained constant from the fourth quarter of 2013.
TAC - Traffic acquisition costs, the portion of revenues shared with Google's partners, increased to $3.23 billion in the first quarter of 2014, compared to $2.96 billion in the first quarter of 2013. TAC as a percentage of advertising revenues was 23% in the first quarter of 2014, compared to 25% in the first quarter of 2013.
The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.39 billion in the first quarter of 2014. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $845 million in the first quarter of 2014.
Other Cost of Revenues - Other cost of revenues, which is comprised primarily of data centers operational expenses, hardware inventory costs, amortization of acquisition-related intangible assets, and content acquisition costs, increased to $2.73 billion, or 18% of revenues, in the first quarter of 2014, compared to $2.17 billion, or 17% of revenues, in the first quarter of 2013.
Operating Expenses - Operating expenses, other than cost of revenues, were $5.34 billion in the first quarter of 2014, or 35% of revenues, compared to $4.07 billion in the first quarter of 2013, or 31% of revenues.
Depreciation and loss on disposal of property and equipment and amortization expenses - Depreciation and loss on disposal of property and equipment and amortization expenses were $1.09 billion for the first quarter of 2014, of which $1.06 billion was related to Google, compared to $899 million in the first quarter of 2013. Of the $1.09 billion, $116 million was related to amortization of Motorola intangibles, which Google will retain subsequent to the disposal of Motorola Mobile.
Stock-Based Compensation (SBC) - In the first quarter of 2014, the total charge related to SBC was $839 million compared to $655 million in the first quarter of 2013. We currently estimate SBC charges for grants to Google employees prior to March 31, 2014 to be approximately $3.22 billion for 2014. This estimate does not include expenses to be recognized related to employee stock awards that are granted after March 31, 2014 or non-employee stock awards that have been or may be granted.
Operating Income - GAAP operating income in the first quarter of 2014 was $4.12 billion, or 27% of revenues. This compares to GAAP operating income of $3.75 billion, or 29% of revenues, in the first quarter of 2013. Non-GAAP operating income in the first quarter of 2014 was $4.95 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.40 billion, or 34% of revenues, in the first quarter of 2013.
Interest and Other Income, Net - Interest and other income, net, was $357 million in the first quarter of 2014, compared to $134 million in the first quarter of 2013.
Income Taxes - Our effective tax rate was 18% for the first quarter of 2014.
Net Loss from Discontinued Operations - Net loss from discontinued operations in the first quarter of 2014 was $198 million, compared to a net loss of $182 million in the first quarter of 2013. Net loss from discontinued operations in the first quarter of 2014 included a pre-tax adjustment of $74 million related to the deferral of certain revenue for the Motorola Mobile segment. Had we presented Motorola Mobile as an operating segment, the Motorola Mobile segment revenue for the first quarter of 2014 would have been $1.45 billion, $74 million higher than what was included in net loss from discontinued operations.
Net Income - GAAP consolidated net income in the first quarter of 2014 was $3.45 billion, compared to $3.35 billion in the first quarter of 2013. Non-GAAP consolidated net income was $4.30 billion in the first quarter of 2014, compared to $4.04 billion in the first quarter of 2013. GAAP EPS in the first quarter of 2014 was $5.04 on 685 million diluted shares outstanding, compared to $4.97 in the first quarter of 2013 on 673 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2014 was $6.27, compared to $6.00 in the first quarter of 2013.
Cash Flow and Capital Expenditures - Net cash provided by operating activities in the first quarter of 2014 totaled $4.39 billion, compared to $3.63 billion in the first quarter of 2013. In the first quarter of 2014, capital expenditures were $2.35 billion, the majority of which was for production equipment, data-center construction, and real estate purchases. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the first quarter of 2014, free cash flow was $2.05 billion.
We expect to continue to make significant capital expenditures.
A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.
Cash - As of March 31, 2014, cash, cash equivalents, and marketable securities were $59.38 billion, which excludes cash classified as held for sale, compared to $58.72 billion as of December 31, 2013.
Headcount - On a worldwide basis, we employed 49,829 full-time employees (46,170 in Google and 3,659 in Motorola Mobile) as of March 31, 2014, compared to 47,756 full-time employees (43,862 in Google and 3,894 in Motorola Mobile) as of December 31, 2013.
WEBCAST AND CONFERENCE CALL INFORMATION
A live audio webcast of Google's first quarter 2014 earnings release call will be available at http://investor.google.com/webcast.html. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, the financial tables, as well as other supplemental information including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, are also available on that site.
We also announce investor information, including news and commentary about our business and financial performance, SEC filings, notices of investor events and our press and earnings releases, on our investor relations website (http://investor.google.com) and our investor relations Google+ page (https://plus.google.com/+GoogleInvestorRelations/posts).
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that involve risks and uncertainties. These statements include statements regarding our investments in areas of strategic focus, our expected SBC charges, and our plans to make significant capital expenditures. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, unforeseen changes in our hiring patterns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2013, which is on file with the SEC and is available on our investor relations website at investor.google.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. All information provided in this release and in the attachments is as of April 16, 2014, and we undertake no duty to update this information unless required by law.
ABOUT NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP EPS, free cash flow, and non-GAAP international revenues. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures," "Reconciliation from net cash provided by operating activities to free cash flow," and "Reconciliation from GAAP international revenues to non-GAAP international revenues" included at the end of this release.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results, meaning our operating performance excluding not only non-cash charges, such as SBC, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income excluding expenses related to SBC, and, as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenues. Google considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of SBC, and as applicable, other special items so that Google's management and investors can compare Google's recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Google's management believes that providing a non-GAAP financial measure that excludes SBC allows investors to make meaningful comparisons between Google's recurring core business operating results and those of other companies, as well as providing Google's management with an important tool for financial and operational decision making and for evaluating Google's own recurring core business operating results over different periods of time. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, SBC, that are recurring. SBC has been and will continue to be for the foreseeable future a significant recurring expense in Google's business. Second, SBC is an important part of our employees' compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.
Non-GAAP net income and EPS. We define non-GAAP net income as net income excluding expenses related to SBC and, as applicable, other special items less the related tax effects, as well as net income (loss) from discontinued operations. The tax effects of SBC and, as applicable, other special items are calculated using the tax-deductible portion of SBC, and, as applicable, other special items, and applying the entity-specific, U.S. federal and blended state tax rates. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that Google uses non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with SBC and, as applicable, other special items. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. The same limitations described above regarding Google's use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.
Free cash flow. We define free cash flow as net cash provided by operating activities less capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure and land and buildings, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening the balance sheet. Analysis of free cash flow also facilitates management's comparisons of our operating results to competitors' operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Google is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Our management compensates for this limitation by providing information about our capital expenditures on the face of the statement of cash flows and under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Google has computed free cash flow using the same consistent method from quarter to quarter and year to year.
Non-GAAP international revenues. We define non-GAAP international revenues as international revenues excluding the impact of foreign exchange rate movements and hedging activities. Non-GAAP international revenues are calculated by translating current quarter revenues using prior quarter and prior year exchange rates, as well as excluding any hedging gains realized in the current quarter. We consider non-GAAP international revenues as a useful metric as it facilitates management's internal comparison to our historical performance.
The accompanying tables have more details on the non-GAAP financial measures that are most directly comparable to GAAP financial measures and the related reconciliations between these financial measures.
Contact:
Julia Duncan
Investor Relations
+1 650-253-3045
juliaduncan@google.com
For Media:
press@google.com
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News for Google's Investor Relations
Google Inc. Announces First Quarter 2014 Results
https://investor.google.com/earnings/2014/Q1_google_earnings.html
Apr 16th 2014, 20:07
Download press release · Download financial data · Open financial data in new window
MOUNTAIN VIEW, Calif. – April 16, 2014 – Google Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended March 31, 2014.
"We completed another great quarter. Google's revenue was $15.4 billion, up 19% year on year", said Larry Page, CEO of Google. "We got lots of product improvements done, especially on mobile. I'm also excited with progress on our emerging businesses."
Q1 Financial Summary
On January 29, 2014, we entered into an agreement with Lenovo Group Limited providing for the disposition of the Motorola Mobile business. As such, financial results of Motorola Mobile are presented as "Net loss from discontinued operations" on the Consolidated Statements of Income for the quarter ended March 31, 2013 and 2014; and assets and liabilities of Motorola Mobile to be disposed of are presented as "Assets held for sale" and "Liabilities held for sale", respectively, on the Consolidated Balance Sheet as of March 31, 2014.
On April 2, 2014, we issued shares of Class C capital stock as a dividend to our stockholders. Except for the number of authorized shares and par value, all references to share and per share amounts have been retroactively restated for all prior periods shown to reflect the stock split, which was effected in the form of a stock dividend.
Google Inc. reported consolidated revenues of $15.42 billion for the quarter ended March 31, 2014, an increase of 19% compared to the first quarter of 2013. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the first quarter of 2014, TAC totaled $3.23 billion, or 23% of advertising revenues.
Operating income, operating margin, net income, and earnings per share (EPS) are reported on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures at the end of this release.
GAAP operating income in the first quarter of 2014 was $4.12 billion, or 27% of revenues. This compares to GAAP operating income of $3.75 billion, or 29% of revenues, in the first quarter of 2013. Non-GAAP operating income in the first quarter of 2014 was $4.95 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.40 billion, or 34% of revenues, in the first quarter of 2013.
GAAP net income (including net loss from discontinued operations) in the first quarter of 2014 was $3.45 billion, compared to $3.35 billion in the first quarter of 2013. Non-GAAP net income in the first quarter of 2014 was $4.30 billion, compared to $4.04 billion in the first quarter of 2013.
GAAP EPS (including impact from net loss from discontinued operations) in the first quarter of 2014 was $5.04 on 685 million diluted shares outstanding, compared to $4.97 in the first quarter of 2013 on 673 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2014 was $6.27, compared to $6.00 in the first quarter of 2013.
Non-GAAP operating income and non-GAAP operating margin exclude stock-based compensation (SBC) expense. Non-GAAP net income and non-GAAP EPS exclude SBC expense, net of the related tax benefit, as well as net loss from discontinued operations. In the first quarter of 2014, the expense related to SBC and the related tax benefits were $839 million and $190 million compared to $655 million and $141 million in the first quarter of 2013. In addition, net loss from discontinued operations in the first quarter of 2014 was $198 million, compared to $182 million in the first quarter of 2013.
Q1 Financial Highlights
Revenues and other information - Google Inc. revenues for the quarter ended March 31, 2014 were $15.42 billion, representing a 19% increase over first quarter of 2013 revenues of $12.95 billion.
Sites Revenues - Our sites generated revenues of $10.47 billion, or 68% of total revenues, in the first quarter of 2014. This represents a 21% increase over first quarter of 2013 sites revenues of $8.64 billion.
Network Revenues - Our partner sites generated revenues of $3.40 billion, or 22% of total revenues, in the first quarter of 2014. This represents a 4% increase over first quarter of 2013 network revenues of $3.26 billion.
Other Revenues - Other revenues were $1.55 billion, or 10% of total revenues, in the first quarter of 2014. This represents a 48% increase over first quarter of 2013 other revenues of $1.05 billion.
International Revenues - Our revenues from outside of the United States totaled $8.76 billion, representing 57% of total revenues in the first quarter of 2014, compared to 56% in the fourth quarter of 2013 and 55% in the first quarter of 2013.
Our revenues from the United Kingdom totaled $1.58 billion, representing 10% of total revenues in the first quarter of 2014, compared to 11% in the first quarter of 2013.
Foreign Exchange Impact on Revenues - Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2013 through the first quarter of 2014, our revenues in the first quarter of 2014 would have been $50 million higher. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2013 through the first quarter of 2014, our revenues in the first quarter of 2014 would have been $163 million higher.
In the first quarter of 2014, we recognized a benefit of $8 million to revenues through our foreign exchange risk management program, compared to $35 million in the first quarter of 2013.
Reconciliations of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues are included at the end of this release.
Paid Clicks - Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 26% over the first quarter of 2013 and decreased approximately 1% over the fourth quarter of 2013.
Cost-Per-Click - Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 9% over the first quarter of 2013 and remained constant from the fourth quarter of 2013.
TAC - Traffic acquisition costs, the portion of revenues shared with Google's partners, increased to $3.23 billion in the first quarter of 2014, compared to $2.96 billion in the first quarter of 2013. TAC as a percentage of advertising revenues was 23% in the first quarter of 2014, compared to 25% in the first quarter of 2013.
The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.39 billion in the first quarter of 2014. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $845 million in the first quarter of 2014.
Other Cost of Revenues - Other cost of revenues, which is comprised primarily of data centers operational expenses, hardware inventory costs, amortization of acquisition-related intangible assets, and content acquisition costs, increased to $2.73 billion, or 18% of revenues, in the first quarter of 2014, compared to $2.17 billion, or 17% of revenues, in the first quarter of 2013.
Operating Expenses - Operating expenses, other than cost of revenues, were $5.34 billion in the first quarter of 2014, or 35% of revenues, compared to $4.07 billion in the first quarter of 2013, or 31% of revenues.
Depreciation and loss on disposal of property and equipment and amortization expenses - Depreciation and loss on disposal of property and equipment and amortization expenses were $1.09 billion for the first quarter of 2014, of which $1.06 billion was related to Google, compared to $899 million in the first quarter of 2013. Of the $1.09 billion, $116 million was related to amortization of Motorola intangibles, which Google will retain subsequent to the disposal of Motorola Mobile.
Stock-Based Compensation (SBC) - In the first quarter of 2014, the total charge related to SBC was $839 million compared to $655 million in the first quarter of 2013. We currently estimate SBC charges for grants to Google employees prior to March 31, 2014 to be approximately $3.22 billion for 2014. This estimate does not include expenses to be recognized related to employee stock awards that are granted after March 31, 2014 or non-employee stock awards that have been or may be granted.
Operating Income - GAAP operating income in the first quarter of 2014 was $4.12 billion, or 27% of revenues. This compares to GAAP operating income of $3.75 billion, or 29% of revenues, in the first quarter of 2013. Non-GAAP operating income in the first quarter of 2014 was $4.95 billion, or 32% of revenues. This compares to non-GAAP operating income of $4.40 billion, or 34% of revenues, in the first quarter of 2013.
Interest and Other Income, Net - Interest and other income, net, was $357 million in the first quarter of 2014, compared to $134 million in the first quarter of 2013.
Income Taxes - Our effective tax rate was 18% for the first quarter of 2014.
Net Loss from Discontinued Operations - Net loss from discontinued operations in the first quarter of 2014 was $198 million, compared to a net loss of $182 million in the first quarter of 2013. Net loss from discontinued operations in the first quarter of 2014 included a pre-tax adjustment of $74 million related to the deferral of certain revenue for the Motorola Mobile segment. Had we presented Motorola Mobile as an operating segment, the Motorola Mobile segment revenue for the first quarter of 2014 would have been $1.45 billion, $74 million higher than what was included in net loss from discontinued operations.
Net Income - GAAP consolidated net income in the first quarter of 2014 was $3.45 billion, compared to $3.35 billion in the first quarter of 2013. Non-GAAP consolidated net income was $4.30 billion in the first quarter of 2014, compared to $4.04 billion in the first quarter of 2013. GAAP EPS in the first quarter of 2014 was $5.04 on 685 million diluted shares outstanding, compared to $4.97 in the first quarter of 2013 on 673 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2014 was $6.27, compared to $6.00 in the first quarter of 2013.
Cash Flow and Capital Expenditures - Net cash provided by operating activities in the first quarter of 2014 totaled $4.39 billion, compared to $3.63 billion in the first quarter of 2013. In the first quarter of 2014, capital expenditures were $2.35 billion, the majority of which was for production equipment, data-center construction, and real estate purchases. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the first quarter of 2014, free cash flow was $2.05 billion.
We expect to continue to make significant capital expenditures.
A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.
Cash - As of March 31, 2014, cash, cash equivalents, and marketable securities were $59.38 billion, which excludes cash classified as held for sale, compared to $58.72 billion as of December 31, 2013.
Headcount - On a worldwide basis, we employed 49,829 full-time employees (46,170 in Google and 3,659 in Motorola Mobile) as of March 31, 2014, compared to 47,756 full-time employees (43,862 in Google and 3,894 in Motorola Mobile) as of December 31, 2013.
WEBCAST AND CONFERENCE CALL INFORMATION
A live audio webcast of Google's first quarter 2014 earnings release call will be available at http://investor.google.com/webcast.html. The call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release, the financial tables, as well as other supplemental information including the reconciliations of certain non-GAAP measures to their nearest comparable GAAP measures, are also available on that site.
We also announce investor information, including news and commentary about our business and financial performance, SEC filings, notices of investor events and our press and earnings releases, on our investor relations website (http://investor.google.com) and our investor relations Google+ page (https://plus.google.com/+GoogleInvestorRelations/posts).
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements that involve risks and uncertainties. These statements include statements regarding our investments in areas of strategic focus, our expected SBC charges, and our plans to make significant capital expenditures. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, unforeseen changes in our hiring patterns and our need to expend capital to accommodate the growth of the business, as well as those risks and uncertainties included under the captions "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2013, which is on file with the SEC and is available on our investor relations website at investor.google.com and on the SEC website at www.sec.gov. Additional information will also be set forth in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2014. All information provided in this release and in the attachments is as of April 16, 2014, and we undertake no duty to update this information unless required by law.
ABOUT NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP EPS, free cash flow, and non-GAAP international revenues. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP results of operations to the nearest comparable GAAP measures," "Reconciliation from net cash provided by operating activities to free cash flow," and "Reconciliation from GAAP international revenues to non-GAAP international revenues" included at the end of this release.
We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. Our management believes that these non-GAAP financial measures provide meaningful supplemental information regarding our performance and liquidity by excluding certain expenses and expenditures that may not be indicative of our recurring core business operating results, meaning our operating performance excluding not only non-cash charges, such as SBC, but also discrete cash charges that are infrequent in nature. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business.
Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income excluding expenses related to SBC, and, as applicable, other special items. Non-GAAP operating margin is defined as non-GAAP operating income divided by revenues. Google considers these non-GAAP financial measures to be useful metrics for management and investors because they exclude the effect of SBC, and as applicable, other special items so that Google's management and investors can compare Google's recurring core business operating results over multiple periods. Because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Google's management believes that providing a non-GAAP financial measure that excludes SBC allows investors to make meaningful comparisons between Google's recurring core business operating results and those of other companies, as well as providing Google's management with an important tool for financial and operational decision making and for evaluating Google's own recurring core business operating results over different periods of time. There are a number of limitations related to the use of non-GAAP operating income versus operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes some costs, namely, SBC, that are recurring. SBC has been and will continue to be for the foreseeable future a significant recurring expense in Google's business. Second, SBC is an important part of our employees' compensation and impacts their performance. Third, the components of the costs that we exclude in our calculation of non-GAAP operating income may differ from the components that our peer companies exclude when they report their results of operations. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP.
Non-GAAP net income and EPS. We define non-GAAP net income as net income excluding expenses related to SBC and, as applicable, other special items less the related tax effects, as well as net income (loss) from discontinued operations. The tax effects of SBC and, as applicable, other special items are calculated using the tax-deductible portion of SBC, and, as applicable, other special items, and applying the entity-specific, U.S. federal and blended state tax rates. We define non-GAAP EPS as non-GAAP net income divided by the weighted average outstanding shares, on a fully-diluted basis. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that Google uses non-GAAP operating income and non-GAAP operating margin. However, in order to provide a complete picture of our recurring core business operating results, we exclude from non-GAAP net income and non-GAAP EPS the tax effects associated with SBC and, as applicable, other special items. Without excluding these tax effects, investors would only see the gross effect that excluding these expenses had on our operating results. The same limitations described above regarding Google's use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP EPS. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP EPS and evaluating non-GAAP net income and non-GAAP EPS together with net income and EPS calculated in accordance with GAAP.
Free cash flow. We define free cash flow as net cash provided by operating activities less capital expenditures. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after the acquisition of property and equipment, including information technology infrastructure and land and buildings, can be used for strategic opportunities, including investing in our business, making strategic acquisitions, and strengthening the balance sheet. Analysis of free cash flow also facilitates management's comparisons of our operating results to competitors' operating results. A limitation of using free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating Google is that free cash flow does not represent the total increase or decrease in the cash balance from operations for the period because it excludes cash used for capital expenditures during the period. Our management compensates for this limitation by providing information about our capital expenditures on the face of the statement of cash flows and under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Quarterly Report on Form 10-Q and Annual Report on Form 10-K. Google has computed free cash flow using the same consistent method from quarter to quarter and year to year.
Non-GAAP international revenues. We define non-GAAP international revenues as international revenues excluding the impact of foreign exchange rate movements and hedging activities. Non-GAAP international revenues are calculated by translating current quarter revenues using prior quarter and prior year exchange rates, as well as excluding any hedging gains realized in the current quarter. We consider non-GAAP international revenues as a useful metric as it facilitates management's internal comparison to our historical performance.
The accompanying tables have more details on the non-GAAP financial measures that are most directly comparable to GAAP financial measures and the related reconciliations between these financial measures.
Contact:
Julia Duncan
Investor Relations
+1 650-253-3045
juliaduncan@google.com
For Media:
press@google.com
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Friday, March 28, 2014
Google News - Investor Relations - Google: Google Announces Internet Availability of Proxy Materials for its 2014 Annual Meeting of Stockholders
Google News - Investor Relations - Google
News for Google's Investor Relations
Google Announces Internet Availability of Proxy Materials for its 2014 Annual Meeting of Stockholders
https://investor.google.com/releases/2014/0328.html
Mar 28th 2014, 20:42
MOUNTAIN VIEW, Calif. (March 28, 2014) - Google Inc. (NASDAQ: GOOG) today announced the internet availability of proxy materials for its 2014 Annual Meeting of Stockholders pursuant to the U.S. Securities and Exchange Commission's Notice and Access rules.
Pursuant to the U.S. Securities and Exchange Commission's Notice and Access rules, companies may satisfy their obligation to deliver proxy materials by delivering a "Notice of Internet Availability of Proxy Materials" to stockholders, providing internet access to the proxy materials, and providing a printed set of proxy materials by mail to any stockholder who requests them. Google has elected to take full advantage of these rules in order to minimize impact on the environment and to maximize cost savings relating to the printing of the proxy materials.
Google's Annual Report on Form 10-K for the year ended December 31, 2013 and proxy statement for its 2014 Annual Meeting of Stockholders have been filed with the U.S. Securities and Exchange Commission, and may be viewed on Google's Investor Relations website at http://investor.google.com/proxy.html. Google's stockholders may obtain hard copies of these proxy materials at no charge by following the instructions provided on its website or in the "Notice of Internet Availability of Proxy Materials."
Google's 2014 Annual Meeting of Stockholders will be held on Wednesday, May 14, 2014 at 2:00 p.m., local time, at Google's corporate headquarters at 1600 Amphitheatre Parkway, Mountain View, California 94043. For your convenience, we are pleased to offer a live webcast of the Annual Meeting at http://investor.google.com/webcast.html.
About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.
Contacts:
Julia Duncan
Investor Relations
+1 650-253-3045
juliaduncan@google.comFor Media:
press@google.com
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News for Google's Investor Relations
Google Announces Internet Availability of Proxy Materials for its 2014 Annual Meeting of Stockholders
https://investor.google.com/releases/2014/0328.html
Mar 28th 2014, 20:42
MOUNTAIN VIEW, Calif. (March 28, 2014) - Google Inc. (NASDAQ: GOOG) today announced the internet availability of proxy materials for its 2014 Annual Meeting of Stockholders pursuant to the U.S. Securities and Exchange Commission's Notice and Access rules.
Pursuant to the U.S. Securities and Exchange Commission's Notice and Access rules, companies may satisfy their obligation to deliver proxy materials by delivering a "Notice of Internet Availability of Proxy Materials" to stockholders, providing internet access to the proxy materials, and providing a printed set of proxy materials by mail to any stockholder who requests them. Google has elected to take full advantage of these rules in order to minimize impact on the environment and to maximize cost savings relating to the printing of the proxy materials.
Google's Annual Report on Form 10-K for the year ended December 31, 2013 and proxy statement for its 2014 Annual Meeting of Stockholders have been filed with the U.S. Securities and Exchange Commission, and may be viewed on Google's Investor Relations website at http://investor.google.com/proxy.html. Google's stockholders may obtain hard copies of these proxy materials at no charge by following the instructions provided on its website or in the "Notice of Internet Availability of Proxy Materials."
Google's 2014 Annual Meeting of Stockholders will be held on Wednesday, May 14, 2014 at 2:00 p.m., local time, at Google's corporate headquarters at 1600 Amphitheatre Parkway, Mountain View, California 94043. For your convenience, we are pleased to offer a live webcast of the Annual Meeting at http://investor.google.com/webcast.html.
About Google Inc.
Google is a global technology leader focused on improving the ways people connect with information. Google's innovations in web search and advertising have made its website a top internet property and its brand one of the most recognized in the world.
Contacts:
Julia Duncan
Investor Relations
+1 650-253-3045
juliaduncan@google.comFor Media:
press@google.com
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