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Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
||||||
Revenues |
$17,258 |
$20,257 |
|||||
Increase in revenues year over year |
12 |
% |
17 |
% |
|||
Increase in constant currency revenues year over year |
17 |
% |
23 |
% |
|||
GAAP operating income |
$4,447 |
$5,342 |
|||||
GAAP operating margin |
26 |
% |
26 |
% |
|||
Non-GAAP operating income |
$5,650 |
$6,836 |
|||||
Non-GAAP operating margin |
33 |
% |
34 |
% |
|||
GAAP net income |
$3,515 |
$4,207 |
|||||
Non-GAAP net income |
$4,461 |
$5,248 |
|||||
GAAP diluted EPS for Class A and B common stock and Class C capital stock |
$5.10 |
$6.02 |
|||||
Non-GAAP diluted EPS for Class A and B common stock and Class C capital stock |
$6.47 |
$7.50 |
|||||
Diluted shares (in thousands) |
689,498 |
699,311 |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
||||||
Google segment revenues |
$17,178 |
$20,091 |
|||||
Google operating income |
$5,188 |
$6,272 |
|||||
Other Bets revenues |
$80 |
$166 |
|||||
Other Bets operating loss |
($633 |
) |
($802 |
) |
Three Months Ended March 31, 2016 |
Change from Q1 2015 to Q1 2016 (YoY) |
Change from Q4 2015 to Q1 2016 (QoQ) |
|||||||
Revenues |
$20,257 |
17 |
% |
(5 |
)% |
||||
Constant currency revenues (YoY) |
$20,850 |
23 |
% |
N/A |
|||||
Constant currency revenues (QoQ) |
$20,238 |
N/A |
(4 |
)% |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
||||||
Cost of revenues |
$6,356 |
$7,648 |
|||||
Cost of revenues as % of revenues |
37 |
% |
38 |
% |
|||
Operating expenses (other than cost of revenues) |
$6,455 |
$7,267 |
|||||
Operating expenses as % of revenues |
37 |
% |
36 |
% |
|||
SBC expense* |
$1,203 |
$1,494 |
|||||
SBC related tax benefits |
($257 |
) |
($453 |
) |
|||
Depreciation, amortization, and impairment charges |
$1,177 |
$1,371 |
|||||
*Excludes the expense for awards accounted for as stock-based compensation that will ultimately settle in cash. |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
||||||
Cash, cash equivalents, and marketable securities |
$65,436 |
$75,264 |
|||||
Net cash provided by operating activities* |
$6,722 |
$7,658 |
|||||
Capital expenditures |
$2,927 |
$2,428 |
|||||
Free cash flow* |
$3,795 |
$5,230 |
|||||
Effective tax rate (ETR)* |
24 |
% |
18 |
% |
|||
Headcount |
55,419 |
64,115 |
|||||
*In Q1 2016, we adopted Accounting Standards Update No. 2016-09, "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting," which addresses, among other items, updates to the presentation and treatment of certain tax benefits related to SBC. Prior period balances related to the consolidated statements of cash flows as well as free cash flow have been adjusted accordingly for comparative purposes. The impact from the changes in the treatment of such tax benefits in Q1 2016 resulted in a favorable ETR impact of 4%. |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
Change from Q1 2015 to Q1 2016 (YoY) |
||||||||
Google segment |
||||||||||
Google websites |
$11,932 |
$14,328 |
20 |
% |
||||||
Google Network Members' websites |
3,576 |
3,692 |
3 |
% |
||||||
Google advertising revenues |
15,508 |
18,020 |
16 |
% |
||||||
Google other revenues |
1,670 |
2,071 |
24 |
% |
||||||
Google segment revenues |
$17,178 |
$20,091 |
17 |
% |
Change from Q1 2015 to Q1 2016 (YoY) |
Change from Q4 2015 to Q1 2016 (QoQ) |
||||
Aggregate paid clicks |
29 |
% |
(3 |
)% |
|
Paid clicks on Google websites |
38 |
% |
(4 |
)% |
|
Paid clicks on Google Network Members' websites |
2 |
% |
4 |
% |
|
Aggregate cost-per-click |
(9 |
)% |
0 |
% |
|
Cost-per-click on Google websites |
(12 |
)% |
2 |
% |
|
Cost-per-click on Google Network Members' websites |
(8 |
)% |
(12 |
)% |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
||||||
TAC to Google Network Members |
$2,432 |
$2,571 |
|||||
TAC to Google Network Members as % of Google Network Members' revenues |
68 |
% |
70 |
% |
|||
TAC to distribution partners |
$913 |
$1,217 |
|||||
TAC to distribution partners as % of Google website revenues |
8 |
% |
8 |
% |
|||
Total TAC |
$3,345 |
$3,788 |
|||||
Total TAC as % of Google advertising revenues |
22 |
% |
21 |
% |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
||||||
Operating income, excluding SBC expense |
$6,243 |
$7,588 |
|||||
SBC expense |
$1,055 |
$1,316 |
|||||
Operating income |
$5,188 |
$6,272 |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
||||||
Capital expenditures |
$2,678 |
$2,036 |
|||||
Depreciation, amortization, and impairment |
$1,137 |
$1,317 |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
||||||
Other Bets revenues |
$80 |
$166 |
|||||
Operating loss, excluding SBC expense |
($516 |
) |
($657 |
) |
|||
SBC expense |
$117 |
$145 |
|||||
Operating loss |
($633 |
) |
($802 |
) |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
||||||
Capital expenditures |
$157 |
$280 |
|||||
Depreciation, amortization, and impairment |
$40 |
$54 |
As of December 31, 2015 |
As of March 31, 2016 |
||||||
(unaudited) |
|||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
16,549 |
$ |
15,111 |
|||
Marketable securities |
56,517 |
60,153 |
|||||
Total cash, cash equivalents, and marketable securities (including securities loaned of $4,531 and $3,851) |
73,066 |
75,264 |
|||||
Accounts receivable, net of allowance of $296 and $276 |
11,556 |
10,818 |
|||||
Receivable under reverse repurchase agreements |
450 |
350 |
|||||
Income taxes receivable, net |
1,903 |
1,804 |
|||||
Prepaid revenue share, expenses and other assets |
3,139 |
2,719 |
|||||
Total current assets |
90,114 |
90,955 |
|||||
Prepaid revenue share, expenses and other assets, non-current |
3,181 |
3,297 |
|||||
Non-marketable investments |
5,183 |
5,577 |
|||||
Deferred income taxes |
251 |
233 |
|||||
Property and equipment, net |
29,016 |
30,162 |
|||||
Intangible assets, net |
3,847 |
3,657 |
|||||
Goodwill |
15,869 |
15,866 |
|||||
Total assets |
$ |
147,461 |
$ |
149,747 |
|||
Liabilities and Stockholders’ Equity |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
1,931 |
$ |
1,667 |
|||
Short-term debt |
3,225 |
3,221 |
|||||
Accrued compensation and benefits |
3,539 |
2,618 |
|||||
Accrued expenses and other current liabilities |
4,768 |
4,517 |
|||||
Accrued revenue share |
2,329 |
2,227 |
|||||
Securities lending payable |
2,428 |
2,171 |
|||||
Deferred revenue |
788 |
933 |
|||||
Income taxes payable, net |
302 |
330 |
|||||
Total current liabilities |
19,310 |
17,684 |
|||||
Long-term debt |
1,995 |
1,987 |
|||||
Deferred revenue, non-current |
151 |
131 |
|||||
Income taxes payable, non-current |
3,663 |
3,812 |
|||||
Deferred income taxes |
189 |
599 |
|||||
Other long-term liabilities |
1,822 |
1,965 |
|||||
Total liabilities |
27,130 |
26,178 |
|||||
Commitments and contingencies |
Stockholders’ equity: |
|||||||
Convertible preferred stock, $0.001 par value per share, 100,000 shares authorized; no shares issued and outstanding |
0 |
0 |
|||||
Class A and Class B common stock, and Class C capital stock and additional paid-in capital, $0.001 par value per share: 15,000,000 shares authorized (Class A 9,000,000, Class B 3,000,000, Class C 3,000,000); 687,348 (Class A 292,297, Class B 50,295, Class C 344,756) and 686,792 (Class A 293,573, Class B 49,536, Class C 343,683) shares issued and outstanding |
32,982 |
33,695 |
|||||
Accumulated other comprehensive loss |
(1,874 |
) |
(1,294 |
) |
|||
Retained earnings |
89,223 |
91,168 |
|||||
Total stockholders’ equity |
120,331 |
123,569 |
|||||
Total liabilities and stockholders’ equity |
$ |
147,461 |
$ |
149,747 |
Three Months Ended |
|||||||
March 31, |
|||||||
2015 |
2016 |
||||||
(unaudited) |
|||||||
Revenues |
$ |
17,258 |
$ |
20,257 |
|||
Costs and expenses: |
|||||||
Cost of revenues |
6,356 |
7,648 |
|||||
Research and development |
2,753 |
3,367 |
|||||
Sales and marketing |
2,065 |
2,387 |
|||||
General and administrative |
1,637 |
1,513 |
|||||
Total costs and expenses |
12,811 |
14,915 |
|||||
Income from operations |
4,447 |
5,342 |
|||||
Other income (expense), net |
157 |
(213 |
) |
||||
Income before income taxes |
4,604 |
5,129 |
|||||
Provision for income taxes |
1,089 |
922 |
|||||
Net income |
$ |
3,515 |
$ |
4,207 |
|||
Basic net income per share of Class A and B common stock and Class C capital stock |
$ |
5.16 |
$ |
6.12 |
|||
Diluted net income per share of Class A and B common stock and Class C capital stock |
$ |
5.10 |
$ |
6.02 |
Three Months Ended |
|||||||
March 31, |
|||||||
2015 |
2016 |
||||||
(unaudited) |
|||||||
Operating activities |
|||||||
Net income |
$ |
3,515 |
$ |
4,207 |
|||
Adjustments: |
|||||||
Depreciation and impairment of property and equipment |
938 |
1,155 |
|||||
Amortization and impairment of intangible assets |
239 |
216 |
|||||
Stock-based compensation expense |
1,203 |
1,494 |
|||||
Deferred income taxes |
71 |
414 |
|||||
Loss on marketable and non-marketable investments, net |
16 |
280 |
|||||
Other |
61 |
64 |
|||||
Changes in assets and liabilities, net of effects of acquisitions: |
|||||||
Accounts receivable |
698 |
818 |
|||||
Income taxes, net |
827 |
271 |
|||||
Prepaid revenue share, expenses and other assets |
43 |
185 |
|||||
Accounts payable |
(24 |
) |
(269 |
) |
|||
Accrued expenses and other liabilities |
(601 |
) |
(1,064 |
) |
|||
Accrued revenue share |
(205 |
) |
(131 |
) |
|||
Deferred revenue |
(59 |
) |
18 |
||||
Net cash provided by operating activities |
6,722 |
7,658 |
|||||
Investing activities |
|||||||
Purchases of property and equipment |
(2,927 |
) |
(2,428 |
) |
|||
Purchases of marketable securities |
(12,558 |
) |
(20,748 |
) |
|||
Maturities and sales of marketable securities |
10,389 |
17,443 |
|||||
Purchases of non-marketable investments |
(1,074 |
) |
(321 |
) |
|||
Cash collateral related to securities lending |
(1,120 |
) |
(257 |
) |
|||
Investments in reverse repurchase agreements |
50 |
100 |
|||||
Acquisitions, net of cash acquired, and purchases of intangible assets |
(64 |
) |
(34 |
) |
|||
Net cash used in investing activities |
(7,304 |
) |
(6,245 |
) |
|||
Financing activities |
|||||||
Net payments related to stock-based award activities |
(493 |
) |
(807 |
) |
|||
Repurchases of capital stock |
0 |
(2,098 |
) |
||||
Proceeds from issuance of debt, net of costs |
3,305 |
3,956 |
|||||
Repayments of debt |
(3,308 |
) |
(3,962 |
) |
|||
Net cash used in financing activities |
(496 |
) |
(2,911 |
) |
|||
Effect of exchange rate changes on cash and cash equivalents |
(293 |
) |
60 |
||||
Net decrease in cash and cash equivalents |
(1,371 |
) |
(1,438 |
) |
|||
Cash and cash equivalents at beginning of period |
18,347 |
16,549 |
|||||
Cash and cash equivalents at end of period |
$ |
16,976 |
$ |
15,111 |
Three Months Ended March 31, 2015 |
Three Months Ended March 31, 2016 |
||||||||||||||||||||||
GAAP Actual |
Adjustments |
Non-GAAP Results |
GAAP Actual |
Adjustments |
Non-GAAP Results |
||||||||||||||||||
Revenues |
$ |
17,258 |
$ |
17,258 |
$ |
20,257 |
$ |
20,257 |
|||||||||||||||
Cost of revenues |
6,356 |
$ |
160 |
(b) |
6,196 |
7,648 |
$ |
241 |
(b) |
7,407 |
|||||||||||||
Research and development |
2,753 |
615 |
(b) |
2,138 |
3,367 |
739 |
(b) |
2,628 |
|||||||||||||||
Sales and marketing |
2,065 |
205 |
(b) |
1,860 |
2,387 |
242 |
(b) |
2,145 |
|||||||||||||||
General and administrative |
1,637 |
223 |
(b) |
1,414 |
1,513 |
272 |
(b) |
1,241 |
|||||||||||||||
Income from operations |
$ |
4,447 |
$ |
1,203 |
$ |
5,650 |
$ |
5,342 |
$ |
1,494 |
$ |
6,836 |
|||||||||||
Operating margin (a)
|
25.8 |
% |
32.7 |
% |
26.4 |
% |
33.7 |
% |
|||||||||||||||
$ |
1,203 |
(b) |
$ |
1,494 |
(b) |
||||||||||||||||||
(257 |
) |
(c) |
(453 |
) |
(c) |
||||||||||||||||||
Net income |
$ |
3,515 |
$ |
946 |
$ |
4,461 |
$ |
4,207 |
$ |
1,041 |
$ |
5,248 |
|||||||||||
Diluted net income per share for Class A and B common stock and Class C capital stock |
$ |
5.10 |
$ |
6.47 |
$ |
6.02 |
$ |
7.50 |
|||||||||||||||
Shares used in per share calculation - diluted |
689,498 |
689,498 |
699,311 |
699,311 |
|||||||||||||||||||
(a) Operating margin is defined as income from operations divided by revenues. Non-GAAP operating margin is defined as non-GAAP income from operations divided by revenues. | |||||||||||||||||||||||
(b) To eliminate SBC expense, excluding expense related to awards that will ultimately settle in cash. | |||||||||||||||||||||||
(c) To eliminate income tax effects related to SBC, which includes the incremental benefits recognized resulting from the adoption of new accounting guidance beginning in Q1 2016. |
Three Months Ended March 31, 2016 |
|||
Net cash provided by operating activities |
$ |
7,658 |
|
Less: purchases of property and equipment |
(2,428 |
) |
|
Free cash flow |
$ |
5,230 |
|
Net cash used in investing activities (a)
|
$ |
(6,245 |
) |
Net cash used in financing activities |
$ |
(2,911 |
) |
(a) Includes purchases of property and equipment. |
Three Months Ended March 31, 2016 |
Three Months Ended March 31, 2016 |
||||||
(using Q1'15's FX rates) |
(using Q4'15's FX rates) |
||||||
United Kingdom revenues (GAAP) |
$ |
1,921 |
$ |
1,921 |
|||
Exclude foreign exchange impact on Q1'16 revenues using Q1'15 rates |
129 |
N/A |
|||||
Exclude foreign exchange impact on Q1'16 revenues using Q4'15 rates |
N/A |
93 |
|||||
Exclude hedging gains recognized in Q1'16 |
(42 |
) |
(42 |
) |
|||
United Kingdom revenues excluding foreign exchange and hedging impact (Non-GAAP) |
$ |
2,008 |
$ |
1,972 |
|||
Rest of the world revenues (GAAP) |
$ |
8,955 |
$ |
8,955 |
|||
Exclude foreign exchange impact on Q1'16 revenues using Q1'15 rates |
633 |
N/A |
|||||
Exclude foreign exchange impact on Q1'16 revenues using Q4'15 rates |
N/A |
57 |
|||||
Exclude hedging gains recognized in Q1'16 |
(127 |
) |
(127 |
) |
|||
Rest of the world revenues excluding foreign exchange and hedging impact (Non-GAAP) |
$ |
9,461 |
$ |
8,885 |
|||
United States revenues (GAAP) |
$ |
9,381 |
$ |
9,381 |
|||
Constant currency revenues (Non-GAAP) |
$ |
20,850 |
$ |
20,238 |
|||
Prior period revenues, excluding hedging gains (Non-GAAP) |
$ |
16,947 |
$ |
20,997 |
|||
Constant currency revenue growth (Non-GAAP) |
23 |
% |
(4 |
)% |
Three Months Ended |
|||||||
March 31, |
|||||||
2015 |
2016 |
||||||
Interest income |
$ |
226 |
$ |
270 |
|||
Interest expense |
(26 |
) |
(30 |
) |
|||
Foreign currency exchange losses, net |
(62 |
) |
(186 |
) |
|||
Gain (loss) on marketable securities, net |
32 |
(167 |
) |
||||
Loss on non-marketable investments, net |
(48 |
) |
(113 |
) |
|||
Other |
35 |
13 |
|||||
Other income (expense), net |
$ |
157 |
$ |
(213 |
) |
Three Months Ended |
|||||||
March 31, |
|||||||
2015 |
2016 |
||||||
Revenues: |
|||||||
Google |
$ |
17,178 |
$ |
20,091 |
|||
Other Bets |
80 |
166 |
|||||
Total revenues |
$ |
17,258 |
$ |
20,257 |
|||
Operating income (loss), excluding stock-based compensation(1):
|
|||||||
Google |
$ |
6,243 |
$ |
7,588 |
|||
Other Bets |
(516 |
) |
(657 |
) |
|||
Reconciling items(2)
|
(77 |
) |
(95 |
) |
|||
Total income from operations, excluding stock-based compensation |
$ |
5,650 |
$ |
6,836 |
|||
Stock-based compensation(1):
|
|||||||
Google |
$ |
1,055 |
$ |
1,316 |
|||
Other Bets |
117 |
145 |
|||||
Reconciling items(2)
|
31 |
33 |
|||||
Total stock-based compensation |
$ |
1,203 |
$ |
1,494 |
|||
Operating income (loss): |
|||||||
Google |
$ |
5,188 |
$ |
6,272 |
|||
Other Bets |
(633 |
) |
(802 |
) |
|||
Reconciling items(2)
|
(108 |
) |
(128 |
) |
|||
Total income from operations |
$ |
4,447 |
$ |
5,342 |
|||
Capital expenditures: |
|||||||
Google |
$ |
2,678 |
$ |
2,036 |
|||
Other Bets |
157 |
280 |
|||||
Reconciling items(3)
|
92 |
112 |
|||||
Total capital expenditures |
$ |
2,927 |
$ |
2,428 |
|||
Depreciation, amortization and impairment: |
|||||||
Google |
$ |
1,137 |
$ |
1,317 |
|||
Other Bets |
40 |
54 |
|||||
Total depreciation, amortization and impairment |
$ |
1,177 |
$ |
1,371 |
(1) |
For purposes of determining SBC for segment reporting, we define SBC as awards accounted for under FASB ASC Topic 718 that we expect to settle in stock. SBC does not include expenses related to awards that we will ultimately settle in cash. |
(2) |
Reconciling items are primarily related to corporate administrative costs and other miscellaneous items that are not allocated to individual segments. |
(3) |
Reconciling items are related to timing differences of payments as segment capital expenditures are on accrual basis while total capital expenditures shown on Consolidated Statements of Cash Flow are on cash basis and other miscellaneous differences. |
Three Months Ended |
|||||||
March 31, |
|||||||
2015 |
2016 |
||||||
Revenues: |
|||||||
Google websites |
$ |
11,932 |
$ |
14,328 |
|||
Google Network Members' websites |
3,576 |
3,692 |
|||||
Google advertising revenues |
15,508 |
18,020 |
|||||
Google other revenues |
1,670 |
2,071 |
|||||
Google segment revenues |
17,178 |
20,091 |
|||||
Other Bets revenues |
80 |
166 |
|||||
Total revenues |
$ |
17,258 |
$ |
20,257 |