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Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
||||||
Revenues |
$18,675 |
$22,451 |
|||||
Increase in revenues year over year |
13 |
% |
20 |
% |
|||
Increase in constant currency revenues year over year |
21 |
% |
23 |
% |
|||
GAAP operating income |
$4,708 |
$5,767 |
|||||
GAAP operating margin |
25 |
% |
26 |
% |
|||
Non-GAAP operating income |
$6,140 |
$7,627 |
|||||
Non-GAAP operating margin |
33 |
% |
34 |
% |
|||
GAAP net income |
$3,979 |
$5,061 |
|||||
Non-GAAP net income |
$5,102 |
$6,326 |
|||||
GAAP diluted EPS for Class A and B common stock and Class C capital stock |
$5.73 |
$7.25 |
|||||
Non-GAAP diluted EPS for Class A and B common stock and Class C capital stock |
$7.35 |
$9.06 |
|||||
Diluted shares (in thousands) |
694,319 |
698,440 |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
||||||
Google segment revenues |
$18,534 |
$22,254 |
|||||
Google operating income |
$5,807 |
$6,778 |
|||||
Other Bets revenues |
$141 |
$197 |
|||||
Other Bets operating loss |
($980 |
) |
($865 |
) |
Three Months Ended September 30, 2016 |
Change from Q3 2015 to Q3 2016 (YoY) |
Change from Q2 2016 to Q3 2016 (QoQ) |
|||||||
Revenues |
$22,451 |
20 |
% |
4 |
% |
||||
Constant currency revenues (YoY) |
$22,542 |
23 |
% |
N/A |
|||||
Constant currency revenues (QoQ) |
$22,458 |
N/A |
5 |
% |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
||||||
Cost of revenues |
$7,037 |
$8,699 |
|||||
Cost of revenues as % of revenues |
38 |
% |
39 |
% |
|||
Operating expenses (other than cost of revenues) |
$6,930 |
$7,985 |
|||||
Operating expenses as % of revenues |
37 |
% |
36 |
% |
|||
SBC expense* |
$1,432 |
$1,860 |
|||||
SBC related tax benefits |
($309 |
) |
($595 |
) |
|||
Depreciation, amortization, and impairment charges |
$1,248 |
$1,596 |
|||||
*Excludes the expense for awards accounted for as stock-based compensation that we expect to ultimately settle in cash. |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
||||||
Cash, cash equivalents, and marketable securities |
$72,767 |
$83,056 |
|||||
Net cash provided by operating activities |
$6,145 |
$9,845 |
|||||
Capital expenditures |
$2,383 |
$2,554 |
|||||
Free cash flow |
$3,762 |
$7,291 |
|||||
Effective tax rate (ETR) |
19 |
% |
16 |
% |
|||
Headcount |
59,976 |
69,953 |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
Change from Q3 2015 to Q3 2016 (YoY) |
||||||||
Google websites |
$13,087 |
$16,089 |
23 |
% |
||||||
Google Network Members' websites |
3,694 |
3,732 |
1 |
% |
||||||
Google advertising revenues |
16,781 |
19,821 |
18 |
% |
||||||
Google other revenues |
1,753 |
2,433 |
39 |
% |
||||||
Google segment revenues |
$18,534 |
$22,254 |
20 |
% |
Change from Q3 2015 to Q3 2016 (YoY) |
Change from Q2 2016 to Q3 2016 (QoQ) |
||||
Aggregate paid clicks |
33 |
% |
9 |
% |
|
Paid clicks on Google websites |
42 |
% |
11 |
% |
|
Paid clicks on Google Network Members' websites |
1 |
% |
1 |
% |
|
Aggregate cost-per-click |
(11 |
)% |
(5 |
)% |
|
Cost-per-click on Google websites |
(13 |
)% |
(6 |
)% |
|
Cost-per-click on Google Network Members' websites |
(14 |
)% |
(6 |
)% |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
||||||
TAC to Google Network Members |
$2,514 |
$2,623 |
|||||
TAC to Google Network Members as % of Google Network Members' revenues |
68 |
% |
70 |
% |
|||
TAC to distribution partners |
$1,052 |
$1,559 |
|||||
TAC to distribution partners as % of Google website revenues |
8 |
% |
10 |
% |
|||
Total TAC |
$3,566 |
$4,182 |
|||||
Total TAC as % of Google advertising revenues |
21 |
% |
21 |
% |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
||||||
Operating income |
$5,807 |
$6,778 |
|||||
SBC expense |
$1,275 |
$1,628 |
|||||
Operating income, excluding SBC expense |
$7,082 |
$8,406 |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
||||||
Capital expenditures |
$2,340 |
$2,434 |
|||||
Depreciation, amortization, and impairment |
$1,200 |
$1,488 |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
||||||
Other Bets revenues |
$141 |
$197 |
|||||
Operating loss |
($980 |
) |
($865 |
) |
|||
SBC expense |
$128 |
$200 |
|||||
Operating loss, excluding SBC expense |
($852 |
) |
($665 |
) |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
||||||
Capital expenditures |
$271 |
$324 |
|||||
Depreciation, amortization, and impairment |
$48 |
$104 |
As of December 31, 2015 |
As of September 30, 2016 |
||||||
(unaudited) |
|||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
16,549 |
$ |
9,406 |
|||
Marketable securities |
56,517 |
73,650 |
|||||
Total cash, cash equivalents, and marketable securities (including securities loaned of $4,531 and $730) |
73,066 |
83,056 |
|||||
Accounts receivable, net of allowance of $296 and $398 |
11,556 |
11,979 |
|||||
Receivable under reverse repurchase agreements |
450 |
0 |
|||||
Income taxes receivable, net |
1,903 |
416 |
|||||
Inventory |
491 |
559 |
|||||
Prepaid revenue share, expenses and other assets |
2,648 |
2,536 |
|||||
Total current assets |
90,114 |
98,546 |
|||||
Prepaid revenue share, expenses and other assets, non-current |
3,181 |
3,276 |
|||||
Non-marketable investments |
5,183 |
5,705 |
|||||
Deferred income taxes |
251 |
273 |
|||||
Property and equipment, net |
29,016 |
32,753 |
|||||
Intangible assets, net |
3,847 |
3,367 |
|||||
Goodwill |
15,869 |
16,028 |
|||||
Total assets |
$ |
147,461 |
$ |
159,948 |
|||
Liabilities and Stockholders’ Equity |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
1,931 |
$ |
2,175 |
|||
Short-term debt |
3,225 |
0 |
|||||
Accrued compensation and benefits |
3,539 |
3,672 |
|||||
Accrued expenses and other current liabilities |
4,768 |
4,840 |
|||||
Accrued revenue share |
2,329 |
2,542 |
|||||
Securities lending payable |
2,428 |
0 |
|||||
Deferred revenue |
788 |
923 |
|||||
Income taxes payable, net |
302 |
171 |
|||||
Total current liabilities |
19,310 |
14,323 |
|||||
Long-term debt |
1,995 |
3,938 |
|||||
Deferred revenue, non-current |
151 |
169 |
|||||
Income taxes payable, non-current |
3,663 |
4,461 |
|||||
Deferred income taxes |
189 |
393 |
|||||
Other long-term liabilities |
1,822 |
2,561 |
|||||
Total liabilities |
27,130 |
25,845 |
|||||
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 689,136 (Class A 295,995, Class B 48,105, Class C 345,036) shares issued and outstanding |
32,982 |
35,337 |
|||||
Accumulated other comprehensive loss |
(1,874 |
) |
(1,032 |
) |
|||
Retained earnings |
89,223 |
99,798 |
|||||
Total stockholders’ equity |
120,331 |
134,103 |
|||||
Total liabilities and stockholders’ equity |
$ |
147,461 |
$ |
159,948 |
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2015 |
2016 |
2015 |
2016 |
||||||||||||
Revenues |
$ |
18,675 |
$ |
22,451 |
$ |
53,660 |
$ |
64,208 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenues |
7,037 |
8,699 |
19,976 |
24,477 |
|||||||||||
Research and development |
3,230 |
3,596 |
8,772 |
10,326 |
|||||||||||
Sales and marketing |
2,223 |
2,565 |
6,368 |
7,367 |
|||||||||||
General and administrative |
1,477 |
1,824 |
4,564 |
4,961 |
|||||||||||
Total costs and expenses |
13,967 |
16,684 |
39,680 |
47,131 |
|||||||||||
Income from operations |
4,708 |
5,767 |
13,980 |
17,077 |
|||||||||||
Other income (expense), net |
183 |
278 |
471 |
216 |
|||||||||||
Income before income taxes |
4,891 |
6,045 |
14,451 |
17,293 |
|||||||||||
Provision for income taxes |
912 |
984 |
3,026 |
3,148 |
|||||||||||
Net income |
$ |
3,979 |
$ |
5,061 |
$ |
11,425 |
$ |
14,145 |
|||||||
Less: Adjustment Payment to Class C capital stockholders |
0 |
0 |
522 |
0 |
|||||||||||
Net income available to all stockholders |
$ |
3,979 |
$ |
5,061 |
$ |
10,903 |
$ |
14,145 |
|||||||
Basic net income per share of Class A and B common stock |
$ |
5.80 |
$ |
7.36 |
$ |
15.95 |
$ |
20.59 |
|||||||
Basic net income per share of Class C capital stock |
$ |
5.80 |
$ |
7.36 |
$ |
17.47 |
$ |
20.59 |
|||||||
Diluted net income per share of Class A and B common stock |
$ |
5.73 |
$ |
7.25 |
$ |
15.77 |
$ |
20.26 |
|||||||
Diluted net income per share of Class C capital stock |
$ |
5.73 |
$ |
7.25 |
$ |
17.27 |
$ |
20.26 |
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2015 |
2016 |
2015 |
2016 |
||||||||||||
Operating activities |
|||||||||||||||
Net income |
$ |
3,979 |
$ |
5,061 |
$ |
11,425 |
$ |
14,145 |
|||||||
Adjustments: |
|||||||||||||||
Depreciation and impairment of property and equipment |
1,030 |
1,377 |
2,979 |
3,803 |
|||||||||||
Amortization and impairment of intangible assets |
218 |
219 |
680 |
654 |
|||||||||||
Stock-based compensation expense |
1,432 |
1,860 |
3,767 |
4,857 |
|||||||||||
Deferred income taxes |
(416 |
) |
(245 |
) |
(566 |
) |
119 |
||||||||
(Gain) loss on marketable and non-marketable investments, net |
(1 |
) |
(90 |
) |
32 |
204 |
|||||||||
Other |
41 |
26 |
157 |
117 |
|||||||||||
Changes in assets and liabilities, net of effects of acquisitions: |
|||||||||||||||
Accounts receivable |
(267 |
) |
(282 |
) |
(336 |
) |
(299 |
) |
|||||||
Income taxes, net |
(857 |
) |
473 |
1,093 |
2,153 |
||||||||||
Prepaid revenue share, expenses and other assets |
142 |
(47 |
) |
204 |
114 |
||||||||||
Accounts payable |
230 |
459 |
(168 |
) |
238 |
||||||||||
Accrued expenses and other liabilities |
583 |
809 |
820 |
338 |
|||||||||||
Accrued revenue share |
52 |
186 |
(69 |
) |
138 |
||||||||||
Deferred revenue |
(21 |
) |
39 |
(55 |
) |
42 |
|||||||||
Net cash provided by operating activities |
6,145 |
9,845 |
19,963 |
26,623 |
|||||||||||
Investing activities |
|||||||||||||||
Purchases of property and equipment |
(2,383 |
) |
(2,554 |
) |
(7,848 |
) |
(7,134 |
) |
|||||||
Proceeds from disposals of property and equipment |
10 |
197 |
33 |
226 |
|||||||||||
Purchases of marketable securities |
(23,091 |
) |
(25,371 |
) |
(56,217 |
) |
(70,959 |
) |
|||||||
Maturities and sales of marketable securities |
19,274 |
16,590 |
46,860 |
54,379 |
|||||||||||
Purchases of non-marketable investments |
(322 |
) |
(90 |
) |
(1,771 |
) |
(673 |
) |
|||||||
Cash collateral related to securities lending |
572 |
(2,065 |
) |
488 |
(2,428 |
) |
|||||||||
Investments in reverse repurchase agreements |
225 |
500 |
475 |
450 |
|||||||||||
Acquisitions, net of cash acquired, and purchases of intangible assets |
(102 |
) |
(252 |
) |
(244 |
) |
(324 |
) |
|||||||
Net cash used in investing activities |
(5,817 |
) |
(13,045 |
) |
(18,224 |
) |
(26,463 |
) |
|||||||
Financing activities |
|||||||||||||||
Net payments related to stock-based award activities |
(606 |
) |
(815 |
) |
(1,610 |
) |
(2,425 |
) |
|||||||
Adjustment Payment to Class C capital stockholders |
0 |
0 |
(47 |
) |
0 |
||||||||||
Repurchases of capital stock |
0 |
0 |
0 |
(3,693 |
) |
||||||||||
Proceeds from issuance of debt, net of costs |
3,634 |
2,976 |
10,332 |
8,729 |
|||||||||||
Repayments of debt |
(3,637 |
) |
(3,250 |
) |
(10,341 |
) |
(10,051 |
) |
|||||||
Net cash used in financing activities |
(609 |
) |
(1,089 |
) |
(1,666 |
) |
(7,440 |
) |
|||||||
Effect of exchange rate changes on cash and cash equivalents |
(104 |
) |
68 |
(352 |
) |
137 |
|||||||||
Net decrease in cash and cash equivalents |
(385 |
) |
(4,221 |
) |
(279 |
) |
(7,143 |
) |
|||||||
Cash and cash equivalents at beginning of period |
18,453 |
13,627 |
18,347 |
16,549 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
18,068 |
$ |
9,406 |
$ |
18,068 |
$ |
9,406 |
Three Months Ended September 30, 2015 |
Three Months Ended September 30, 2016 |
||||||||||||||||||||||
GAAP Actual |
Adjustments |
Non-GAAP Results |
GAAP Actual |
Adjustments |
Non-GAAP Results |
||||||||||||||||||
Revenues |
$ |
18,675 |
$ |
18,675 |
$ |
22,451 |
$ |
22,451 |
|||||||||||||||
Cost of revenues |
7,037 |
$ |
231 |
(b) |
6,806 |
8,699 |
$ |
325 |
(b) |
8,374 |
|||||||||||||
Research and development |
3,230 |
741 |
(b) |
2,489 |
3,596 |
922 |
(b) |
2,674 |
|||||||||||||||
Sales and marketing |
2,223 |
250 |
(b) |
1,973 |
2,565 |
297 |
(b) |
2,268 |
|||||||||||||||
General and administrative |
1,477 |
210 |
(b) |
1,267 |
1,824 |
316 |
(b) |
1,508 |
|||||||||||||||
Income from operations |
$ |
4,708 |
$ |
1,432 |
$ |
6,140 |
$ |
5,767 |
$ |
1,860 |
$ |
7,627 |
|||||||||||
Operating margin (a)
|
25.2 |
% |
32.9 |
% |
25.7 |
% |
34.0 |
% |
|||||||||||||||
$ |
1,432 |
(b) |
$ |
1,860 |
(b) |
||||||||||||||||||
(309 |
) |
(c) |
(595 |
) |
(c) |
||||||||||||||||||
Net income |
$ |
3,979 |
$ |
1,123 |
$ |
5,102 |
$ |
5,061 |
$ |
1,265 |
$ |
6,326 |
|||||||||||
Diluted net income per share for Class A and B common stock and Class C capital stock |
$ |
5.73 |
$ |
7.35 |
$ |
7.25 |
$ |
9.06 |
|||||||||||||||
Shares used in per share calculation - diluted |
694,319 |
694,319 |
698,440 |
698,440 |
|||||||||||||||||||
(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 we expect to ultimately settle in cash. | |||||||||||||||||||||||
(c) To eliminate income tax effects related to SBC, which includes the incremental benefits recognized resulting from the adoption of ASU 2016-09 beginning in Q1 2016. |
Three Months Ended September 30, 2016 |
|||
Net cash provided by operating activities |
$ |
9,845 |
|
Less: purchases of property and equipment |
(2,554 |
) |
|
Free cash flow |
$ |
7,291 |
|
Net cash used in investing activities (a)
|
$ |
(13,045 |
) |
Net cash used in financing activities |
$ |
(1,089 |
) |
(a) Includes purchases of property and equipment. |
Three Months Ended September 30, 2016 |
Three Months Ended September 30, 2016 |
||||||
(using Q3'15's FX rates) |
(using Q2'16's FX rates) |
||||||
United Kingdom revenues (GAAP) |
$ |
1,890 |
$ |
1,890 |
|||
Exclude foreign exchange impact on Q3'16 revenues using Q3'15 rates |
277 |
N/A |
|||||
Exclude foreign exchange impact on Q3'16 revenues using Q2'16 rates |
N/A |
153 |
|||||
Exclude hedging gains recognized in Q3'16 |
(84 |
) |
(84 |
) |
|||
United Kingdom constant currency revenues (non-GAAP) |
$ |
2,083 |
$ |
1,959 |
|||
Prior period United Kingdom revenues, excluding hedging gains (non-GAAP) |
$ |
1,772 |
$ |
1,877 |
|||
United Kingdom revenue growth rate (GAAP) |
5 |
% |
(1 |
)% |
|||
United Kingdom constant currency revenue growth rate (non-GAAP) |
18 |
% |
4 |
% |
|||
Rest of the world revenues (GAAP) |
$ |
9,912 |
$ |
9,912 |
|||
Exclude foreign exchange impact on Q3'16 revenues using Q3'15 rates |
(81 |
) |
N/A |
||||
Exclude foreign exchange impact on Q3'16 revenues using Q2'16 rates |
N/A |
(41 |
) |
||||
Exclude hedging gains recognized in Q3'16 |
(21 |
) |
(21 |
) |
|||
Rest of the world constant currency revenues (non-GAAP) |
$ |
9,810 |
$ |
9,850 |
|||
Prior period Rest of the world revenues, excluding hedging gains (non-GAAP) |
$ |
7,869 |
$ |
9,510 |
|||
Rest of the world revenue growth rate (GAAP) |
22 |
% |
4 |
% |
|||
Rest of the world constant currency revenue growth rate (non-GAAP) |
25 |
% |
4 |
% |
|||
United States revenues (GAAP) |
$ |
10,649 |
$ |
10,649 |
|||
United States revenue growth rate (GAAP) |
22 |
% |
6 |
% |
|||
Revenues (GAAP) |
$ |
22,451 |
$ |
22,451 |
|||
Constant currency revenues (non-GAAP) |
$ |
22,542 |
$ |
22,458 |
|||
Prior period revenues, excluding hedging gains (non-GAAP) |
$ |
18,389 |
$ |
21,422 |
|||
Revenue growth rate (GAAP) |
20 |
% |
4 |
% |
|||
Constant currency revenue growth rate (non-GAAP) |
23 |
% |
5 |
% |
Three Months Ended |
|||||||
September 30, |
|||||||
2015 |
2016 |
||||||
Interest income |
$ |
259 |
$ |
318 |
|||
Interest expense |
(26 |
) |
(29 |
) |
|||
Foreign currency exchange losses, net |
(100 |
) |
(123 |
) |
|||
Gain (loss) on marketable securities, net |
(6 |
) |
50 |
||||
Gain on non-marketable investments, net |
7 |
40 |
|||||
Other |
49 |
22 |
|||||
Other income (expense), net |
$ |
183 |
$ |
278 |
Three Months Ended |
|||||||
September 30, |
|||||||
2015 |
2016 |
||||||
Revenues: |
|||||||
Google |
$ |
18,534 |
$ |
22,254 |
|||
Other Bets |
141 |
197 |
|||||
Total revenues |
$ |
18,675 |
$ |
22,451 |
|||
Operating income (loss): |
|||||||
Google |
$ |
5,807 |
$ |
6,778 |
|||
Other Bets |
(980 |
) |
(865 |
) |
|||
Reconciling items(1)
|
(119 |
) |
(146 |
) |
|||
Total income from operations |
$ |
4,708 |
$ |
5,767 |
|||
Stock-based compensation(2):
|
|||||||
Google |
$ |
1,275 |
$ |
1,628 |
|||
Other Bets |
128 |
200 |
|||||
Reconciling items(1)
|
29 |
32 |
|||||
Total stock-based compensation |
$ |
1,432 |
$ |
1,860 |
|||
Operating income (loss), excluding stock-based compensation(2):
|
|||||||
Google |
$ |
7,082 |
$ |
8,406 |
|||
Other Bets |
(852 |
) |
(665 |
) |
|||
Reconciling items(1)
|
(90 |
) |
(114 |
) |
|||
Total income from operations, excluding stock-based compensation |
$ |
6,140 |
$ |
7,627 |
|||
Capital expenditures: |
|||||||
Google |
$ |
2,340 |
$ |
2,434 |
|||
Other Bets |
271 |
324 |
|||||
Reconciling items(3)
|
(228 |
) |
(204 |
) |
|||
Total capital expenditures |
$ |
2,383 |
$ |
2,554 |
|||
Depreciation, amortization, and impairment: |
|||||||
Google |
$ |
1,200 |
$ |
1,488 |
|||
Other Bets |
48 |
104 |
|||||
Reconciling items(1)
|
0 |
4 |
|||||
Total depreciation, amortization, and impairment |
$ |
1,248 |
$ |
1,596 |
(1) |
Reconciling items are primarily related to corporate administrative costs and other miscellaneous items that are not allocated to individual segments. |
(2) |
For purposes of segment reporting, we define SBC as awards accounted for under FASB ASC Topic 718 that we expect to settle in stock. SBC for segment reporting does not include expenses related to awards that we expect to ultimately settle in cash. |
(3) |
Reconciling items are related to timing differences of payments as segment capital expenditures are on accrual basis while total capital expenditures shown on the Consolidated Statements of Cash Flows are on cash basis and other miscellaneous differences. |
Three Months Ended |
|||||||
September 30, |
|||||||
2015 |
2016 |
||||||
Revenues: |
|||||||
Google websites |
$ |
13,087 |
$ |
16,089 |
|||
Google Network Members' websites |
3,694 |
3,732 |
|||||
Google advertising revenues |
16,781 |
19,821 |
|||||
Google other revenues |
1,753 |
2,433 |
|||||
Google segment revenues |
18,534 |
22,254 |
|||||
Other Bets revenues |
141 |
197 |
|||||
Total revenues |
$ |
18,675 |
$ |
22,451 |