Alphabet Inc (google) Class C · NASDAQ:GOOG
Alphabet Inc (google) Class C — Alphabet — Q3 2014 Earnings Presentation
15 slides from Alphabet Inc (google) Class C's earnings presentation, 2014
Slide 1: Q3 2014 Quarterly Earnings Summary
Q3 2014 Quarterly Earnings Summary Google Confidential and Proprietary
Slide 2: Q3 2014 Highlights
Q3 2014 Highlights Financial Highlights: Operational Highlights: Revenue growth of 20% Y/Y and 4% Q/Q. Strong financial metrics: revenue growth and operating cash flow. Revenues were $16.52 billion. Continuing to focus on three major product areas: • Google sites revenues increased 20% Y/Y and 3% Q/
Slide 3: Quarterly Revenues
Quarterly Revenues Revenues by Revenue Source U.S. vs. International $20,000 ($ in millions) ($ in millions) Q3'14 Y/Y Change = 20% 11,526 12,905 12,951 13,107 13,754 15,707 15,420 15,955 16,523 Q3'14 Q/Q Change = 4% 100% 16,523 53% 54% 55% 55% 56% 56% 57% 58% 58% 15,955 15,707 15,420 90% $15,000 3,
Slide 4: Paid Clicks
Paid Clicks (1) 50% Y/Y Paid Clicks Growth % 20% Q/Q Paid Clicks Growth % 44% 16% 40% 15% 40% 13% 37% 11% 33% 10% 31% 9% 29% 8% 30% 7% 26% 26% 6% 25% 24% 5% 23% 5% 4% 4% 4% 3% 3% 20% 2% 2% 2% 20% 17% 0% -1% 13% -3% 10% 9% 9% -4% 10% -5% -5% -5% 5% 2% 0% -10% Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14
Slide 5: Cost-Per-Click
Cost-Per-Click Y/Y Cost-Per-Click Growth % Q/Q Cost-Per-Click Growth % 0% 6% -2% -2% 4% 4% -4% -4% 3% 3% -5% 2% -5% 2% -6% -6% -6% -7% 0% 0% 0% 0% -8% -8% 0% -9% -9% -1% -2% -2% -2% -2% -10% -2% -11% -11% -12% -4% -4% -4% -13% -13% -4% -5% -15% -6% -15% -6% -7% -7% -8% -8% -20% -10% Q1'13 Q2'13 Q3'1
Slide 6: Traffic Acquisition Costs
Traffic Acquisition Costs $3,500 3,348 30% 3,311 3,293 3,232 3,076 2,962 3,013 2,972 $3,000 2,770 25.5% 25.5% $2,500 25.0% 24.9% 25% 23.7% 23.5% 23.3% (in millions) $2,000 22.9% 22.8% $1,500 20% $1,000 $500 $0 15% Q3'12 Q4'12 Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 TAC (in millions) TAC as % of Ad
Slide 7: Costs and Expenses
Costs and Expenses Q3 2013 Q2 2014 Q3 2014 GAAP $ in millions As % of revenues $ in millions As % of revenues $ in millions As % of revenues Cost of Revenues $5,409 39% $6,114 38% $6,695 40% Research & Development $1,821 13% $2,238 14% $2,655 16% Sales & Marketing $1,628 12% $1,941 12% $2,084 13% Ge
Slide 8: Profitability
Profitability GAAP ($ in millions) Q3 2013 Q2 2014 Q3 2014 Income from Operations $3,761 $4,258 $3,724 Operating Margin (1) 27% 27% 23% Net Income from Continuing Operations $3,163 $3,490 $2,998 Net Loss from Discontinued Operations $(193) $(68) $(185) Net Income $2,970 $3,422 $2,813 EPS (Diluted) -
Slide 9: Consolidated Free Cash Flow
Consolidated Free Cash Flow Non-GAAP ($ in millions) Q3 2013 (1) Q2 2014 (1) Q3 2014 (1) Net cash provided by operating activities $5,083 $5,627 $5,994 Less: Purchases of property and equipment $(2,289) $(2,646) $(2,417) Free Cash Flow $2,794 $2,981 $3,577 (1) Includes Motorola Mobile. 7
Slide 10: Overview of Q3 2014 OI&E and FX
Overview of Q3 2014 OI&E and FX • In Q3, we recognized $133M of Interest and Other Income, net. • In Q3, we recognized $187M of interest income earned on our investments, $18M of net realized gains on marketable securities, and $25M of interest expense on our long-term debt. • We recognized $67M of
Slide 11: Revenues by Geography
Revenues by Geography ($ in millions) Q3 2013 Q2 2014 Q3 2014 United States $6,080 $6,630 $6,975 United Kingdom 1,389 1,616 1,627 Rest of the world 6,285 7,709 7,921 Total Revenues $13,754 $15,955 $16,523 9
Slide 12: International Revenues excluding Hedging and FX Impact (Y/Y)
International Revenues excluding Hedging and FX Impact (Y/Y) ($ in millions) Q3 2013 Q3 2014 UK revenues (GAAP) $1,389 $1,627 exclude: a) f/x impact on Q3'14 revenues using Q3'13 rates N/A (121) b) hedging gains (17) — UK revenues excluding f/x and hedging impact (Non- $1,372 $1,506 GAAP) Y/Y% (Non-
Slide 13: International Revenues excluding Hedging and FX Impact (Q/Q)
International Revenues excluding Hedging and FX Impact (Q/Q) ($ in millions) Q2 2014 Q3 2014 UK revenues (GAAP) $1,616 $1,627 exclude: a) f/x impact on Q3'14 revenues using Q2'14 rates N/A (9) b) hedging gains — — UK revenues excluding f/x and hedging impact (Non-GAAP) $1,616 $1,618 Q/Q% (Non-GAAP)
Slide 14: Table 1 - Reconciliations of GAAP to non-GAAP costs and expenses
Table 1 - Reconciliations of consolidated GAAP to non-GAAP costs and expenses Q3 2013 Q2 2014 Q3 2014 $ in millions As a % of revenues (1) $ in millions As a % of revenues (1) $ in millions As a % of revenues (1) Cost of Revenues (GAAP) $5,409 39% $6,114 38% $6,695 40% Less: Non-GAAP adjustments (2)
Slide 15: Table 2 - Reconciliations of non-GAAP results of operations measures
Table 2 - Reconciliations of non-GAAP consolidated results of operations measures to the nearest comparable GAAP measures ($ in millions) Q3 2013 Q2 2014 Q3 2014 Income from operations (GAAP) $3,761 $4,258 $3,724 (1) Operating margin 27% 27% 23% Add: Stock-based compensation expense (SBC) $856 $880