Google announces Q4 2012 results

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Google1The Internet giant Google has released as it was for the last quarter of 2012 and it seems that the year closed nicely. With the blunt announcement, Larry Page introduced communicates (next to it), that Google ended the year with $ 50 billion in profits for the fourth quarter of 2012, which compared the last year, the company improved by 36% others with $ 2.35 billion in cash and shares.
Exactly, the quarter closed with gains of $ 14.42 billion while waiting NYSE just $ 12.27 billion which are definite strong numbers.

 googleearnings
Press release:

 

Google Inc. Announces Fourth Quarter and Fiscal Year 2012 Results

Google Inc. reported consolidated revenues of $14.42 billion for the quarter ended December 31, 2012. Consolidated revenues would have been $15.24 billion had Motorola Home been included.

MOUNTAIN VIEW, Calif. – January 22, 2013 – Google Inc. (NASDAQ: GOOG) today announced financial results for the quarter and the fiscal year ended December 31, 2012.

“We ended 2012 with a strong quarter,” said Larry Page, CEO of Google. “Revenues were up 36% year-on-year, and 8% quarter-on-quarter. And we hit $50 billion in revenues for the first time last year – not a bad achievement in just a decade and a half. In today’s multi-screen world we face tremendous opportunities as a technology company focused on user benefit. It’s an incredibly exciting time to be at Google.”

Q4 Financial Summary

In December 2012, we entered into an agreement with Arris Group, Inc. and certain other persons to dispose the Motorola Home business for a total consideration of approximately $2.35 billion in cash and stock, subject to certain adjustments. The transaction is expected to close in 2013. As a result, financial results related to the Home business are presented as net loss from discontinued operations on the consolidated statements of income, and are excluded from all other results unless otherwise noted. Assets and liabilities of the Home business are not presented separately because they are not material.

Google Inc. reported consolidated revenues of $14.42 billion for the quarter ended December 31, 2012, an increase of 36% compared to the fourth quarter of 2011. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the fourth quarter of 2012, TAC totaled $3.08 billion, or 25% 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 fourth quarter of 2012 was $3.39 billion, or 24% of revenues. This compares to GAAP operating income of $3.51 billion, or 33% of revenues, in the fourth quarter of 2011. Non-GAAP operating income in the fourth quarter of 2012 was $4.27 billion, or 30% of revenues. This compares to non-GAAP operating income of $4.04 billion, or 38% of revenues, in the fourth quarter of 2011. Had we included Home, non-GAAP operating income in the fourth quarter of 2012 would have been $4.31 billion.
  • GAAP net income including net loss from discontinued operations in the fourth quarter of 2012 was $2.89 billion, compared to $2.71 billion in the fourth quarter of 2011. Non-GAAP net income in the fourth quarter of 2012 was $3.57 billion, compared to $3.13 billion in the fourth quarter of 2011.
  • GAAP EPS including impact from net loss from discontinued operations in the fourth quarter of 2012 was $8.62 on 335 million diluted shares outstanding, compared to $8.22 in the fourth quarter of 2011 on 329 million diluted shares outstanding. Non-GAAP EPS in the fourth quarter of 2012 was $10.65, compared to $9.50 in the fourth quarter of 2011.
  • Non-GAAP operating income and non-GAAP operating margin exclude stock-based compensation (SBC) expense, as well as restructuring and related charges recorded in our Motorola Mobile business. Non-GAAP net income and non-GAAP EPS exclude the expenses noted above, net of the related tax benefits, as well as net loss from discontinued operations. In the fourth quarter of 2012, the expense related to SBC and the related tax benefits were $700 million and $152 million compared to $536 million and $114 million in the fourth quarter of 2011. In the fourth quarter of 2012, restructuring and related charges recorded in our Motorola Mobile business were $178 million, and the related tax benefits were $65 million. In addition, net loss from discontinued operations, in the fourth quarter of 2012, was $21 million. In the fourth quarter of 2012, non-GAAP operating income with Home included the impact from Home of $35 million and excludes the above SBC expense and restructuring and related charges.

Q4 Financial Highlights

Revenues and other information – On a consolidated basis, Google Inc. revenues for the quarter ended December 31, 2012 was $14.42 billion, an increase of 36% compared to the fourth quarter of 2011.

  • Google Revenues (advertising and other) – Google revenues were $12.91 billion, or 89% of consolidated revenues, in the fourth quarter of 2012, representing a 22% increase over fourth quarter 2011 revenues of $10.58 billion.
    • Google Sites Revenues – Google-owned sites generated revenues of $8.64 billion, or 67% of total Google revenues, in the fourth quarter of 2012. This represents a 18% increase over fourth quarter 2011 Google sites revenues of $7.29 billion.
    • Google Network Revenues – Google’s partner sites generated revenues of $3.44 billion, or 27% of total Google revenues, in the fourth quarter of 2012. This represents a 19% increase from fourth quarter 2011 Google network revenues of $2.88 billion.
    • Other Revenues – Other revenues from Google were $829 million, or 6% of total Google revenues, in the fourth quarter of 2012. This represents a 102% increase over fourth quarter 2011 other revenues of $410 million.

    Google International Revenues – Google revenues from outside of the United States totaled $6.9 billion, representing 54% of total Google revenues in the fourth quarter of 2012, compared to 53% in the third quarter of 2012 and 53% in the fourth quarter of 2011.

    Foreign Exchange Impact on Google Revenues – Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the third quarter of 2012 through the fourth quarter of 2012, our Google revenues in the fourth quarter of 2012 would have been $130 million lower. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2011 through the fourth quarter of 2012, our Google revenues in the fourth quarter of 2012 would have been $193 million higher.

    • Google revenues from the United Kingdom totaled $1.30 billion, representing 10% of Google revenues in the fourth quarter of 2012, compared to 10% in the fourth quarter of 2011.
    • In the fourth quarter of 2012, we recognized a benefit of $37 million to Google revenues through our foreign exchange risk management program, compared to $25 million in the fourth quarter of 2011.

    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 24% over the fourth quarter of 2011 and increased approximately 9% over the third quarter of 2012.

    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 fourth quarter of 2011 and increased approximately 2% over the third quarter of 2012.

    TAC – Traffic acquisition costs, the portion of revenues shared with Google’s partners, increased to $3.08 billion in the fourth quarter of 2012, compared to $2.45 billion in the fourth quarter of 2011. TAC as a percentage of advertising revenues was 25% in the fourth quarter of 2012, compared to 24% in the fourth quarter of 2011.

    The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.44 billion in the fourth quarter of 2012. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $634 million in the fourth quarter of 2012.

  • Motorola Mobile Revenues (hardware and other) – Motorola Mobile revenues were $1.51 billion, or 11% of consolidated revenues in the fourth quarter of 2012.

Other Cost of Revenues – Other cost of revenues, which is comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs, credit card processing charges, and manufacturing and inventory-related costs, increased to $3.14 billion, or 22% of revenues, in the fourth quarter of 2012, compared to $1.25 billion, or 12% of revenues, in the fourth quarter of 2011.

Operating Expenses – Operating expenses, other than cost of revenues, were $4.81 billion in the fourth quarter of 2012, or 33% of revenues, compared to $3.38 billion in the fourth quarter of 2011, or 32% of revenues.

Amortization Expenses – Amortization expenses of acquisition-related intangible assets were $289 million for the fourth quarter of 2012.  Of the $289 million, $153 million was as a result of the acquisition of Motorola, of which $116 million was allocated to Google and $37 million was allocated to Motorola Mobile.

Stock-Based Compensation (SBC) – In the fourth quarter of 2012, the total charge related to SBC was $708 million, compared to $536 million in the fourth quarter of 2011.

We currently estimate SBC charges for grants to employees prior to January 1, 2013 to be approximately $2.5 billion for 2013. This estimate does not include expenses to be recognized related to employee stock awards that are granted after December 31, 2012 or non-employee stock awards that have been or may be granted.

Operating Income – On a consolidated basis, GAAP operating income in the fourth quarter of 2012 was $3.39 billion, or 24% of revenues. This compares to GAAP operating income of $3.51 billion, or 33% of revenues, in the fourth quarter of 2011. Non-GAAP operating income in the fourth quarter of 2012 was $4.27 billion, or 30% of revenues. This compares to non-GAAP operating income of $4.04 billion, or 38% of revenues, in the fourth quarter of 2011.

  • Google Operating Income – GAAP operating income for Google was $3.75 billion, or 29% of Google revenues, in the fourth quarter of 2012. This compares to GAAP operating income of $3.51 billion, or 33% of Google revenues, in the fourth quarter of 2011. Non-GAAP operating income in the fourth quarter of 2012 was $4.42 billion, or 34% of Google revenues. This compares to non-GAAP operating income of $4.04 billion in the fourth quarter of 2011, or 38% of Google revenues.
  • Motorola Mobile Operating Loss – GAAP operating loss for Motorola Mobile was $353 million, or -23% of Motorola Mobile revenues in the fourth quarter of 2012. Non-GAAP operating loss for Motorola Mobile in the fourth quarter of 2012 was $152 million, or -10% of Motorola Mobile revenues.

Interest and Other Income, Net – Interest and other income, net, was $152 million in the fourth quarter of 2012, compared to an expense of $18 million in the fourth quarter of 2011.

Income Taxes – Our effective tax rate was 18% for the fourth quarter of 2012.

Net Income – GAAP net income in the fourth quarter of 2012 was $2.89 billion, compared to $2.71 billion in the fourth quarter of 2011. Non-GAAP net income was $3.57 billion in the fourth quarter of 2012, compared to $3.13 billion in the fourth quarter of 2011. GAAP EPS in the fourth quarter of 2012 was $8.62 on 335 million diluted shares outstanding, compared to $8.22 in the fourth quarter of 2011 on 329 million diluted shares outstanding. Non-GAAP EPS in the fourth quarter of 2012 was $10.65, compared to $9.50 in the fourth quarter of 2011.

Cash Flow and Capital Expenditures (including Home) – Net cash provided by operating activities in the fourth quarter of 2012 totaled $4.67 billion, compared to $3.92 billion in the fourth quarter of 2011. In the fourth quarter of 2012, capital expenditures were $1.02 billion, the majority of which was for production equipment, data center construction and facilities-related 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 fourth quarter of 2012, free cash flow was $3.65 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 December 31, 2012, cash, cash equivalents, and marketable securities were $48.1 billion.

Headcount – On a worldwide basis, we employed 53,861 full-time employees (37,544 in Google and 11,113 in Motorola Mobile and 5,204 in Motorola Home) as of December 31, 2012, compared to 53,546 full-time employees as of September 30, 2012.

WEBCAST AND CONFERENCE CALL INFORMATION

A live audio webcast of Google’s fourth quarter and fiscal year 2012 earnings release call will be available athttp://investor.google.com/webcast.html. The decision starts as of late at 1:30 PM (PT) / four:30 PM (ET). This press free up, the monetary tables, in addition to different supplemental knowledge together with the reconciliations of sure non-GAAP measures to their nearest related GAAP measures, are additionally on hand on that web page.

FORWARD-LOOKING STATEMENTS

This press unencumber incorporates ahead-taking a look statements that contain dangers and uncertainties. These statements embrace statements relating to our persisted investments in our core areas of strategic focal point, our anticipated SBC prices, and our plans to make vital capital charges. Precise outcomes could fluctuate materially from the consequences anticipated, and stated outcomes will have to now not be regarded as as a sign of future efficiency. The prospective dangers and uncertainties that would lead to precise outcomes to vary from the implications anticipated embody, amongst others, unexpected modifications in our hiring patterns and our want to fritter away capital to accommodate the expansion of the trade, in addition to these dangers and uncertainties incorporated below the captions “Possibility Elements” and “Administration’s Dialogue and Prognosis of Monetary Situation and Outcomes of Operations” in our Annual File on Type 10-Ok for the yr ended December 31, 2011 and our most contemporary Quarterly File on Type 10-Q for the quarter ended September 30, 2012, that are on file with the SEC and are on hand on our investor members of the family web site at investor.google.com and on the SEC web site at www.sec.gov. More information will even be set forth in our Annual Document on Type 10-Okay for the yr ended December 31, 2012. All data supplied on this unencumber and within the attachments is as of January 22, 2013, and we undertake no responsibility to replace this data until required through regulation.

ABOUT NON-GAAP FINANCIAL MEASURES

To complement our consolidated monetary statements, that are ready and offered according to GAAP, we use the next non-GAAP monetary measures: non-GAAP working profits, non-GAAP working margin, non-GAAP internet earnings, non-GAAP EPS, free money float, and non-GAAP global revenues. The presentation of this monetary knowledge shouldn’t be supposed to be regarded as in isolation or as an alternative choice to, or sophisticated to, the monetary data ready and offered in response to GAAP. For extra knowledge on these non-GAAP monetary measures, please see the tables captioned “Reconciliations of chosen non-GAAP monetary measures to the closest related GAAP monetary measures,” “Reconciliations of non-GAAP outcomes of operations to the closest related GAAP measures,” “Reconciliation from web money equipped via running actions to free money drift,” and “Reconciliation from GAAP global revenues to non-GAAP world revenues” integrated on the finish of this unlock.

We use these non-GAAP monetary measures for monetary and operational resolution-making and as a way to judge duration-to-length comparisons. Our administration believes that these non-GAAP monetary measures present significant supplemental knowledge concerning our efficiency and liquidity by way of except for sure bills and expenses that is probably not indicative of our ordinary core trade running outcomes, which means our working efficiency except no longer handiest non-money prices, similar to SBC, but additionally discrete money costs which might be rare in nature. We consider that each administration and traders take advantage of referring to those non-GAAP monetary measures in assessing our efficiency and when planning, forecasting, and inspecting future classes. These non-GAAP monetary measures additionally facilitate administration’s inner comparisons to our historic efficiency and liquidity in addition to comparisons to our opponents’ working outcomes. We imagine these non-GAAP monetary measures are helpful to traders each as a result of (1) they permit for higher transparency with appreciate to key metrics utilized by administration in its monetary and operational choice-making and (2) they’re utilized by our institutional traders and the analyst neighborhood to assist them analyze the well being of our trade.

Non-GAAP working earnings and working margin. We outline non-GAAP running earnings as running profits plus bills associated to SBC, and, as appropriate, different different gadgets. Non-GAAP working margin is outlined as non-GAAP running profits divided via revenues. Google considers these non-GAAP monetary measures to be helpful metrics for administration and buyers as a result of they exclude the impact of SBC, and as acceptable, different unique objects in order that Google’s administration and traders can evaluate Google’s routine core industry working outcomes over a couple of sessions. As a result of various to be had valuation methodologies, subjective assumptions and the number of award sorts that firms can use below FASB ASC Matter 718, Google’s administration believes that offering a non-GAAP monetary measure that excludes SBC permits traders to make significant comparisons between Google’s routine core trade running outcomes and people of alternative firms, in addition to offering Google’s administration with a very powerful device for monetary and operational determination making and for evaluating Google’s personal ordinary core trade running outcomes over completely different classes of time. There are a selection of barriers associated to using non-GAAP working earnings versus running profits calculated based on GAAP. First, non-GAAP working earnings excludes some prices, particularly, SBC, which can be routine. SBC has been and can proceed to be for the foreseeable future a major routine fee in Google’s trade. 2nd, SBC is the most important a part of our workers’ compensation and affects their efficiency. 1/3, the parts of the prices that we exclude in our calculation of non-GAAP working earnings could fluctuate from the parts that our peer corporations exclude once they record their outcomes of operations. Administration compensates for these obstacles by using offering particular data relating to the GAAP quantities excluded from non-GAAP working earnings and evaluating non-GAAP working profits at the side of working profits calculated in line with GAAP.

Non-GAAP working profits with House. We outline non-GAAP working earnings with Dwelling as running profits plus SBC rate, restructuring and associated fees, and the affect from House. We imagine this non-GAAP monetary measure to be a helpful metric for administration and buyers for a similar causes that Google makes use of non-GAAP running earnings.

Non-GAAP internet profits and EPS. We outline non-GAAP web earnings as web earnings plus bills associated to SBC and, as acceptable, different different objects much less the associated tax results, in addition to web loss from discontinued operations. The tax results of SBC and, as appropriate, different different objects are calculated the usage of the tax-deductible part of SBC, and, as appropriate, different unique objects, and making use of the entity-particular, U.S. federal and blended state tax charges. We outline non-GAAP EPS as non-GAAP internet earnings divided by means of the weighted moderate prominent shares, on a totally-diluted foundation. We imagine these non-GAAP monetary measures to be a helpful metric for administration and traders for a similar causes that Google makes use of non-GAAP working earnings and non-GAAP running margin. On the other hand, in an effort to present a whole image of our habitual core industry working outcomes, we exclude from non-GAAP web earnings and non-GAAP EPS the tax results related to SBC and, as acceptable, different different gadgets. With out apart from these tax results, buyers would most effective see the gross impact that apart from these bills had on our running outcomes. The identical barriers described above relating to Google’s use of non-GAAP working earnings and non-GAAP working margin follow to our use of non-GAAP web earnings and non-GAAP EPS. Administration compensates for these boundaries with the aid of offering explicit data relating to the GAAP quantities excluded from non-GAAP web earnings and non-GAAP EPS and evaluating non-GAAP internet earnings and non-GAAP EPS along side web profits and EPS calculated according to GAAP.

Free money drift. We outline free money go with the flow as internet money equipped by way of running actions much less capital bills. We imagine free money waft to be a liquidity measure that gives helpful knowledge to administration and traders about the amount of money generated by means of the trade that, after the acquisition of property and gear, together with data expertise infrastructure and land and structures, can be utilized for strategic alternatives, together with investing in our trade, making strategic acquisitions, and strengthening the steadiness sheet. Prognosis of free money glide additionally allows administration’s comparisons of our running outcomes to rivals’ running outcomes. A difficulty of the use of free money go with the flow versus the GAAP measure of web money equipped via working actions as a way for evaluating Google is that free money float does no longer signify the whole elevate or lower within the money stability from operations for the length as a result of it excludes money used for capital fees all the way through the length. Our administration compensates for this drawback via offering details about our capital fees on the face of the commentary of money flows and beneath the caption “Administration’s Dialogue and Diagnosis of Monetary Situation and Outcomes of Operations” in our Quarterly File on Type 10-Q and Annual File on Type 10-Ok. Google has computed free money waft the use of the identical constant means from quarter to quarter and yr to yr.

Non-GAAP world revenues. We outline non-GAAP global revenues as world revenues except for the influence of international alternate and hedging. Non-GAAP world revenues are calculated with the aid of translating present quarter revenues the use of prior quarter and prior yr alternate charges, in addition to except any hedging features realized within the present quarter. We imagine non-GAAP global revenues as a helpful metric because it helps administration’s inside comparability to our historic efficiency.

The accompanying tables have extra important points on the non-GAAP monetary measures which can be most right away related to GAAP monetary measures and the associated reconciliations between these monetary measures.

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