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Home » Business News

Second Quarter 2009 Financials Released by Google

Submitted by on 29 December, 2013 – 4:32 am

Search engine, Google, has released the company’s economic results, for the period ending as of June thirty, 2009. Eric Schmidt, CEO of Google discussed ”Google had a particularly good quarter, particularly given the continuing macro-economic downturn. While the majority of the world’s biggest economies shrank, Google’s year-over-year revenues were up three percent. These results emphasize the iconic strength of Google’s financial model and Google’s responsible attempts to manage costs in a way that places us in a good position for the business upswing, when it happens. We remain concentrated on making an investment in technical invention to drive expansion in our core and new businesses. Google reported earnings of $5.52 bill for the quarter ending June thirty, 2009, an increase of three percent compared to the 2nd quarter of 2008.

Google reports its income, consistent with GAAP, on a gross basis without subtracting traffic purchase costs ( TAC ). In quarter 2 of 2009, TAC totaled $1.45 bln, or 27% of advertising cash. Google reports operating earnings, net earnings, and revenues per share ( EPS ) on a GAAP and non-GAAP basis.

The non-GAAP measures, as well as free money flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures in the concomitant monetary tables.

GAAP operating earnings for First-quarter of 2009 was $1.87 bln, or 34% of cash. This compares to GAAP operating salary of $1.58 bill, or 29% of earnings, in quarter two of 2008. Non-GAAP operating revenue in the 1st quarter of 2009 was $2.17 bill, or 39% of earnings. This compares to non-GAAP operating salary of $1.85 bill, or 34% of earnings, in Second-quarter of 2008. GAAP net revenue for the 2nd quarter of 2009 was $1.48 bln in comparison to $382 million in quarter 4 of 2008. Non-GAAP net revenue in quarter one of 2009 was $1.71 bln, compared to $1.47 bill in quarter two of 2008. Non-GAAP EPS in the 1st quarter of 2009 was $5.16, compared to $5.10 in quarter four of 2008. Non-GAAP operating revenue and non-GAAP operating margin exclude the costs related to stock-based compensation ( SBC ).

Non-GAAP net income and non-GAAP EPS exclude the costs related to SBC, and the related tax benefits. In Second-quarter of 2009, the charge related to SBC was $293 million in comparison to $273 million in quarter 2 of 2008. The tax benefit related to SBC was $69 million in the 2nd quarter of 2009 and $48 million in Second-quarter of 2008.  Reconciliations of non-GAAP measures to GAAP operating revenue, operating margin, net revenue, and EPS are included at the end of this release.

Q2 Financial Highlights included:

Revenues – Google reported revenues of $5.52 billion in the second quarter of 2009, representing a 3% increase over second quarter 2008 revenues of $5.37 billion and a 3% decrease from fourth quarter 2008 revenues of $5.70 billion. Google reports its revenues, consistent with GAAP, on a gross basis without deducting TAC.

Google Sites Revenues – Google-owned sites generated revenues of $3.65 billion, or 66% of total revenues, in the second quarter of 2009. This represents a 3% increase over second quarter 2008 revenues of $3.65 billion.

Google Network Revenues – Google’s partner sites generated revenues, through AdSense programs, of $1.68 billion, or 31% of total revenues, in the second quarter of 2009. This represents a 2% increase from second quarter 2008 network revenues of $1.66 billion.

International Revenues – Revenues from outside of the United States totaled $2.91 billion, representing 53% of total revenues in the second quarter of 2009, compared to 52% in the first quarter of 2009 and second quarter of 2008. Excluding gains related to Google’s foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2009 through the second quarter of 2009, Google’s revenues in the second quarter of 2009 would have been $44 million lower. Excluding gains related to Google’s foreign exchange risk management program, had foreign exchange rates remained constant from the second quarter of 2008 through the second quarter of 2009, Google’s revenues in the second quarter of 2009 would have been $497 million higher.

Revenues from the United Kingdom totaled $715 million, representing 13% of revenues in the second quarter of 2009, compared to 14% in the second quarter of 2008.

In the second quarter of 2009, Google recognized a benefit of $124 million to revenues through Google’s foreign exchange risk management program.Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of Google’s AdSense partners, increased approximately 15% over the second quarter of 2008 and decreased approximately 2% over the first quarter of 2009.

Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of Google’s AdSense partners, decreased approximately 13% over the second quarter of 2008 and increased approximately 5% over the first quarter of 2009.

TAC – Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, decreased to $1.45 billion in the second quarter of 2009, compared to TAC of $1.47 billion in the second quarter of 2008. TAC as a percentage of advertising revenues was 27% in the second quarter of 2009, compared to 28% in the second quarter of 2008.

The majority of TAC is related to amounts ultimately paid to Google’s AdSense partners, which totaled $1.24 billion in the second quarter of 2009. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to Google’s website, which totaled $218 million in the second quarter of 2009.

Other Cost of Revenues – Other cost of revenues, which is comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs as well as credit card processing charges, decreased to $655 million, or 12% of revenues, in the second quarter of 2009, compared to $674 million, or 13% of revenues, in the second quarter of 2008.

Operating Expenses – Operating expenses, other than cost of revenues, were $1.54 billion in the second quarter of 2009, or 28% of revenues, compared to $1.64 billion in the second quarter of 2008, or 31% of revenues.

Stock-Based Compensation (SBC) – In the second quarter of 2009, the total charge related to SBC was $293 million as compared to $273 million in the second quarter of 2008.

Google currently estimates SBC charges for grants to employees prior to July 1, 2009 to be approximately $1.1 billion for 2009. This estimate does not include expenses to be recognized related to employee stock awards that are granted after June 30, 2009 or non-employee stock awards that have been or may be granted.

Operating Income – GAAP operating income in the second quarter of 2009 was $1.87 billion, or 34% of revenues. This compares to GAAP operating income of $1.58 billion, or 29% of revenues, in the second quarter of 2008. Non-GAAP operating income in the second quarter of 2009 was $2.17 billion, or 39% of revenues. This compares to non-GAAP operating income of $1.85 billion, or 34% of revenues, in the second quarter of 2008.

Interest and Other Income (Expense), Net – Interest and other income (expense), net decreased to an expense of $18 million in the second quarter of 2009, compared to an income of $58 million in the second quarter of 2008.

Income Taxes – Effective tax rate was 20% for the second quarter of 2009.

Net Income – GAAP net income for the second quarter of 2009 was $1.48 billion as compared to $1.25 billion in the second quarter of 2008.  Non-GAAP net income was $1.71 billion in the second quarter of 2009, compared to $1.47 billion in the second quarter of 2008.  GAAP EPS for the second quarter of 2009 was $4.66 on 319 million diluted shares outstanding, compared to $3.92 for the second quarter of 2008, on 318 million diluted shares outstanding.  Non-GAAP EPS for the second quarter of 2009 was $5.36, compared to $4.63 in the second quarter of 2008. 
 
Cash Flow and Capital Expenditures – Net cash provided by operating activities for the second quarter of 2009 totaled $1.61 billion as compared to $1.77 billion for the second quarter of 2008.  In the second quarter of 2009, capital expenditures were $139 million, the majority of which was related to IT infrastructure investments, including data centers, servers, and networking equipment.  Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures.  In the second quarter of 2009, free cash flow was $1.47 billion. 
 
Google expects 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 June 30, 2009, cash, cash equivalents, and short-term marketable securities were $19.3 billion. 

On a worldwide basis, Google employed 19,786 full-time employees as of June 30, 2009, down from 20,164 full-time employees as of March 31, 2009.

An audio webcast of Google’s second quarter 2009 earnings release call will be available at http://investor.google.com/webcast.html. Google hosted an additional question-and-answer session to provide an opportunity for financial analysts to ask more detailed product and financial questions.

With the largest index of websites available on the World Wide Web and the industry’s most advanced search technology, Google Inc. delivers the fastest and easiest way to find relevant information on the Internet. Google’s technological innovations have earned the company numerous industry awards and citations, including two Webby Awards; two WIRED magazine Readers Raves Awards; Best Internet Innovation and Technical Excellence Award from PC Magazine; Best Search Engine on the Internet from Yahoo! Internet Life; Top Ten Best Cybertech from TIME magazine; and Editor’s Pick from CNET. A growing number of companies worldwide, including Yahoo! and its international properties, Sony Corporation and its global affiliates, AOL/Netscape, and Cisco Systems, rely on Google to power search on their websites. A privately held company based in Mountain View, Calif., Google’s investors include Kleiner Perkins Caufield Byers and Sequoia Capital.

For more information Google, please visit: www.google.com

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