Q1 2015 Quarterly Earnings Summary - Alphabet Inc. · 2020-04-29 · 27% 28% 27% 27% 23% 24% 26% GAAP Operating income ... $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000

Q1 2015Quarterly Earnings Summary

($ in millions)

Revenues by Revenue Source(1)

Other Google Sites Network

$25,000

$20,000

$15,000

$10,000

$5,000

$0

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

920 926 1,100 1,501 1,423 1,457 1,703 1,794 1,750

8,640 8,868 9,37610,538 10,469 10,935 11,252

12,429 11,932

3,391 3,3133,278

3,668 3,5283,563

3,568

3,8803,576

Quarterly Revenues

Y/Y Change = 12%Q/Q Change = -5%

($ in millions)

Revenues by Geography

US Rest of World UK

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

45% 45% 44% 44% 43% 42% 42% 44% 43%

44% 45% 46% 46% 47% 48% 48% 47% 47%

11% 10% 10% 10% 10% 10% 10% 9% 10%

2

15,955

12,951 13,754

15,707

13,107

15,95512,951 13,107 13,754 15,707

15,420

15,420

16,523

16,523 18,103

18,10317,258

17,258

(1) Prior period amounts have been adjusted to reflect the reclassification primarily related to DoubleClick ad serving software revenues from other revenues to advertisingrevenues from Google Network Members' websites to conform with our current period presentation.

Paid Clicks

Aggregated Network Google Sites

50%

40%

30%

20%

10%

0%

-10%

-20%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

20%

23%

26%

31%

26%25%

17%

14%13%

20%

13%

5%

10%9% 9%

2%

(11)%(12)%

20%

29%

40%

44%

37%

33%

24%25% 25%

3


25%

20%

15%

10%

5%

0%

-5%

-10%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

3%4%

8%

13%

-1%

2% 2%

11%

-1%

5%

-5%

3%

7%

4%

-5%-4%

-7%

4%

2%

9%

11%

16%

-3%

6%

4%

18%

-3%

Y/Y Paid Clicks Growth % Q/Q Paid Clicks Growth %

Cost-per-Click


10%

5%

0%

-5%

-10%

-15%

-20%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

-4%

-6%

-8%

-11%

-9%

-6%

-2%

-3%

-7%

-9%

-5%

-6%

-11%

-12%

-13%

-4%

6%

2%

-2%

-8%

-13%

-15%

-11%

-7%

-4%

-8%

-13%

4


15%

10%

5%

0%

-5%

-10%

-15%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

-4%

-2%

-4%

-2%

0% 0% 0%

-3%

-5%

-7%

4%

-7%

0%

-8%

3%

2%

10%

-11%

-2%

-6%

-5%

-4%

3%

-2%

-1%

-8%

-3%

Y/Y Cost-Per-Click Growth % Q/Q Cost-Per-Click Growth %

Traffic Acquisition Costs

TAC ($ in millions) TAC as % of Advertising Revenues

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0

(inm

illio

ns)

30%

25%

20%

15%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

2,962 3,013 2,972

3,311 3,232 3,293 3,348

3,624

3,345

24.6% 24.7%

23.5% 23.3% 23.1%22.7% 22.6%

22.2%21.6%

5

GAAP Costs and Expenses

Cost of Revenues Research and Development

Sales and Marketing General and Administrative

$16,000

$14,000

$12,000

$10,000

$8,000

$6,000

$4,000

$2,000

$0

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

5,136 5,195 5,409

6,253 5,961 6,1146,695 6,921

6,3561,617 1,766 1,821

1,933 2,126 2,238

2,6552,813

2,753

1,435 1,583 1,628

1,908 1,7291,941

2,0842,377

2,065

1,0151,098

1,135

1,184 1,4891,404

1,365

1,593

1,637



100%

80%

60%

40%

20%

0%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

40% 40% 39% 40% 39% 38%40%

38% 37%

12% 13% 13% 12% 14% 14%16%

16% 16%

11% 12% 12% 12% 11% 12%13%

13% 12%

8%9% 9% 8% 9% 9%

8% 9%9%

74% 73%73%

$9,642$9,203

$11,69776%

73% 72%

$9,993

77%

$11,305$11,27871%

$12,799$13,704

($ in millions) (As a % of Revenues)

$12,811

74%

6

Non-GAAP Costs and Expenses



$14,000

$12,000

$10,000

$8,000

$6,000

$4,000

$2,000

$0

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

5,037 5,085 5,276

6,126 5,866 6,014 6,1486,750

6,1961,279 1,365 1,385

1,467 1,6701,791

1,989

2,1822,138

1,317 1,458 1,473

1,754 1,5821,783

1,887

2,164

1,860

915991 1,003

1,058 1,3481,229

1,142

1,407

1,414



80%

60%

40%

20%

0%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

39% 39% 38% 39% 38% 38% 37% 37% 36%

10% 10% 10% 9% 11% 11% 12% 12% 12%

10% 11% 11% 11% 10% 11% 11% 12% 11%

7% 8% 7% 7% 9% 8% 8% 8%8%

($ in millions) (As a % of Revenues)

$9,137$8,899$8,548

$10,405 $10,466

$11,166$10,817

69%68%68%68%66%66%68%66%

$12,503

For reconciliation of GAAP to non-GAAP costs and expenses please refer to Table 1 at the end of the slide deck.

$11,608 67%

7

Operating Income ($ in millions) Operating Margin (%)

$5,000

$4,500

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0

(inm

illio

ns)

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

3,748

3,465

3,761

4,429

4,1154,258

3,724

4,399 4,447

29%

26%27%

28%27% 27%

23%24%

26%

GAAP

Operating income ($ in millions) Operating Margin (%)

$6,000

$5,500

$5,000

$4,500

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0(in

mill

ions

)

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

4,4034,208

4,617

5,302

4,9545,138

5,3575,600 5,650

34%32%

34% 34%32% 32% 32%

31%33%

Non-GAAP

Operating Income and Operating Margin

For reconciliation of GAAP to non-GAAP operating income please refer to Table 2 at the end of the slide deck.

8

GAAP Net income ($ in millions)

GAAP Diluted earnings per share ($)

$5,000

$4,500

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0

(inm

illio

ns)

$8

$7

$6

$5

$4

$3

$2

$1

$0

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

3,3463,228

2,970

3,376 3,452 3,422

2,813

4,757

3,586

4.974.77

4.38

4.95 5.04 4.99

4.09

6.91

5.20

Non-GAAP Net income ($ in millions)

Non-GAAP Diluted earnings per share ($)

$5,000

$4,500

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0(in

mill

ions

)

$8

$7

$6

$5

$4

$3

$2

$1

$0

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

4,042

3,357

3,819

4,571

4,2994,175

4,373

4,7364,532

6.00

4.96

5.63

6.70

6.276.08

6.35

6.886.57

Net Income and Earnings per Share

Non-GAAP GAAP

Please refer to previous press releases for net income and diluted earnings per share on continuing and discontinuing operations base, and Table 2 forGAAP to non-GAAP reconciliations.

9

Capital Expenditures & Free Cash Flow

10

Free Cash Flow Capital Expenditures

$8,000

$7,000

$6,000

$5,000

$4,000

$3,000

$2,000

$1,000

$0

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

2,430

3,0942,794

2,983

2,046

2,981

3,577

2,813

3,690

1,203

1,611 2,2892,255

2,345

2,646

2,4173,551

2,927

3,633

4,7055,083 5,238

4,391

5,6275,994

6,364($ in millions)

Capital expenditures added to free cash flow equals net cash provided from operating activities on the statement of cash flow.

All numbers include Motorola Home until its date of disposal (April 17,2013) and Motorola Mobile until its date of disposal (October 29, 2014).

6,617

Overview of Q1 2015 OI&E 250

200

150

100

50

0

$(M

illio

ns)

Interest income Interest expense Realized gainson AFSsecurities, net

FX currencyexchangelosses, net

Other income, net Interest and otherincome, net

226

(26) 32

(62)

(13)

157

(1) We recognized $62M of foreign exchange loss, which is primarily related to our FX hedging programs.

Interest and otherIncome(net)

11

(1)

FX Impact on Q1'15 Revenues Using Q1'14 Rates (Y/Y)

UK Revenues

2,000

1,500

1,000

500

0

$(M

illio

ns)

GAAP revenues Foreign exchange impact Hedging benefit Non-GAAP revenues

1,675116

(20)

1,771

Rest of World (ROW) Revenues

10,000

8,000

6,000

4,000

2,000

0

$(M

illio

ns)

GAAP revenues Foreign exchange impact Hedging benefit Non-GAAP revenues

8,195

990

(291)

8,894

Y/Y Change(1) = 12%Y/Y Change(2) = 24%

(1) Y/Y change is calculated as Q1'15 fixed revenue of $1,771M compared with Q1'14 revenues of $1,583M (UK GAAP revenue of $1,583M less hedgebenefit of $0M).

(2)Y/Y change is calculated as Q1'15 fixed revenue of $8.894 compared with Q1'14 revenues of $7,173M (ROW GAAP revenue of $7,181M less hedgebenefit of $8M). 12

FX Impact on Q1'15 Revenues Using Q4'14 Rates (Q/Q)

UK Revenues

2,000

1,500

1,000

500

0

$(M

illio

ns)

GAAP revenues Foreign exchangeimpact

Hedging benefit Non-GAAP revenues

1,67562

(20)

1,717

Rest of World (ROW) Revenues

10,000

8,000

6,000

4,000

2,000

0

$(M

illio

ns)

GAAP revenues Foreign exchangeimpact

Hedging benefit Non-GAAP revenues

8,195512

(291)

8,416

Q/Q Change(1) = 4% Q/Q Change(2) = 0%

(1) Q/Q change is calculated as Q1'15 Fixed revenue of $1,717M compared with Q4'14 revenues of $1,654M (UK GAAPrevenue of $1,657M less hedge benefit of $3M).

(2) Q/Q change is calculated as Q1'15 Fixed revenue of $8,416M compared with Q4'14 revenues of $8,423M (ROW GAAPrevenue of $8,568M less hedge benefit of $145M). 13

Table 1 - Reconciliations of consolidated GAAP to non-GAAP costs and expenses$ in millions

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

Cost of Revenues (GAAP) $5,136 $5,195 $5,409 $6,253 $5,961 $6,114 $6,695 $6,921 $6,356

Less: Non-GAAPadjustments (1) (99) (110) (133) (127) (95) (100) (547) (171) (160)

Cost of Revenues (non-GAAP) $5,037 $5,085 $5,276 $6,126 $5,866 $6,014 $6,148 $6,750 $6,196

Research & Development(GAAP) $1,617 $1,766 $1,821 $1,933 $2,126 $2,238 $2,655 $2,813 $2,753


Research & Development (non-GAAP) $1,279 $1,365 $1,385 $1,467 $1,670 $1,791 $1,989 $2,182 $2,138

Sales & Marketing (GAAP) $1,435 $1,583 $1,628 $1,908 $1,729 $1,941 $2,084 $2,377 $2,065


Sales & Marketing (non-GAAP) $1,317 $1,458 $1,473 $1,754 1,582 1,783 1,887 2,164 $1,860

General & Administrative(GAAP) $1,015 $1,098 $1,135 $1,184 $1,489 $1,404 $1,365 $1,593 $1,637


General & Administrative (non-GAAP) $915 $991 $1,003 $1,058 $1,348 $1,229 $1,142 $1,407 $1,414

Total Costs & Expenses(GAAP) $9,203 $9,642 $9,993 $11,278 $11,305 $11,697 $12,799 $13,704 $12,811

Less: Non-GAAPadjustments (1) (655) (743) (856) (873) (839) (880) (1,633) (1,201) (1,203)

Total Costs & Expenses (non-GAAP) $8,548 $8,899 $9,137 $10,405 $10,466 $10,817 $11,166 $12,503 $11,608

(1) Compromised of stock based compensation expense(2) Includes a $378M impairment charge related to a patent licensing royalty asset acquired in the purchase of Motorola

14

(2)

.(1) Tax effect of SBC is calculated using tax-deductible portion of SBC and applying entity-specific tax rates.

($ in millions) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

Income from operations (GAAP) $3,748 $3,465 $3,761 $4,429 $4,115 $4,258 $3,724 $4,399 $4,447

Add: Stock-based compensation expense(SBC) from continuing operations $655 $743 $856 $873 $839 $880 $1,255 $1,201 $1,203

Add: Impairment charge related to a patentlicensing royalty asset $— $— $— $— $— $— $378 $— $—

Income from operations (non-GAAP) $4,403 $4,208 $4,617 $5,302 $4,954 $5,138 $5,357 $5,600 $5,650

($ in millions) Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15

Net income (GAAP) $3,346 $3,228 $2,970 $3,376 $3,452 $3,422 $2,813 $4,757 $3,586

Add: Stock-based compensation expense (netof tax) (1) $514 $583 $656 $689 $649 $685 $997 $946 $946

Add: Impairment charge related to a patentlicensing royalty asset acquired in connectionwith the purchase of Motorola

$— $— $— $— $— $— $378 $— $—

Add: Net loss (income) from discontinuedoperations $182 $(454) $193 $506 $198 $68 $185 $(967) $—

Net income (non-GAAP) $4,042 $3,357 $3,819 $4,571 $4,299 $4,175 $4,373 $4,736 $4,532

Table 2 - Reconciliations of non-GAAP consolidated results of operationsmeasures to the nearest comparable GAAP measures

15

Documents

Q1 2015 Quarterly Earnings Summary - Alphabet Inc. · 2020-04-29 · 27% 28% 27% 27% 23% 24% 26% GAAP Operating income ... $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000