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Three Months Ended September 30, 2016 |
Three Months Ended September 30, 2017 |
||||||
Revenues |
$22,451 |
$27,772 |
|||||
Increase in revenues year over year |
20 |
% |
24 |
% |
|||
Increase in constant currency revenues year over year |
23 |
% |
24 |
% |
|||
Operating income |
$5,767 |
$7,782 |
|||||
Operating margin |
26 |
% |
28 |
% |
|||
Net income |
$5,061 |
$6,732 |
|||||
Diluted EPS |
$7.25 |
$9.57 |
|||||
Diluted shares (in thousands) |
698,440 |
703,716 |
|||||
Effective tax rate (ETR) |
16 |
% |
16 |
% |
|||
Headcount |
69,953 |
78,101 |
Three Months Ended September 30, 2016 |
Three Months Ended September 30, 2017 |
||||||
Google properties revenues |
$16,089 |
$19,723 |
|||||
Google Network Members' properties revenues |
3,732 |
4,342 |
|||||
Google advertising revenues |
19,821 |
24,065 |
|||||
Google other revenues |
2,433 |
3,405 |
|||||
Google segment revenues |
$22,254 |
$27,470 |
|||||
Other Bets revenues |
$197 |
$302 |
|||||
Google operating income |
$6,774 |
$8,744 |
|||||
Other Bets operating loss |
($861 |
) |
($812 |
) |
Three Months Ended September 30, 2016 |
Three Months Ended September 30, 2017 |
||||||
TAC to Google Network Members |
$2,623 |
$3,101 |
|||||
TAC to Google Network Members as % of Google Network Members' properties revenues |
70 |
% |
71 |
% |
|||
TAC to distribution partners |
$1,559 |
$2,401 |
|||||
TAC to distribution partners as % of Google properties revenues |
10 |
% |
12 |
% |
|||
Total TAC |
$4,182 |
$5,502 |
|||||
Total TAC as % of Google advertising revenues |
21 |
% |
23 |
% |
Change from Q3 2016 to Q3 2017 (YoY) |
Change from Q2 2017 to Q3 2017 (QoQ) |
||||
Aggregate paid clicks |
47 |
% |
6 |
% |
|
Paid clicks on Google properties |
55 |
% |
7 |
% |
|
Paid clicks on Google Network Members' properties |
10 |
% |
2 |
% |
|
Aggregate cost-per-click |
(18 |
)% |
1 |
% |
|
Cost-per-click on Google properties |
(21 |
)% |
1 |
% |
|
Cost-per-click on Google Network Members' properties |
(5 |
)% |
0 |
% |
December 31, 2016 |
September 30, 2017 |
||||||
(unaudited) |
|||||||
Assets |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
12,918 |
$ |
10,581 |
|||
Marketable securities |
73,415 |
89,562 |
|||||
Total cash, cash equivalents, and marketable securities |
86,333 |
100,143 |
|||||
Accounts receivable, net of allowance of $467 and $625 |
14,137 |
15,295 |
|||||
Income taxes receivable, net |
95 |
282 |
|||||
Inventory |
268 |
765 |
|||||
Other current assets |
4,575 |
2,860 |
|||||
Total current assets |
105,408 |
119,345 |
|||||
Non-marketable investments |
5,878 |
7,269 |
|||||
Deferred income taxes |
383 |
505 |
|||||
Property and equipment, net |
34,234 |
40,120 |
|||||
Intangible assets, net |
3,307 |
2,883 |
|||||
Goodwill |
16,468 |
16,731 |
|||||
Other non-current assets |
1,819 |
2,683 |
|||||
Total assets |
$ |
167,497 |
$ |
189,536 |
|||
Liabilities and Stockholders’ Equity |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
2,041 |
$ |
2,674 |
|||
Accrued compensation and benefits |
3,976 |
4,022 |
|||||
Accrued expenses and other current liabilities |
6,144 |
9,307 |
|||||
Accrued revenue share |
2,942 |
3,200 |
|||||
Deferred revenue |
1,099 |
1,269 |
|||||
Income taxes payable, net |
554 |
221 |
|||||
Total current liabilities |
16,756 |
20,693 |
|||||
Long-term debt |
3,935 |
3,964 |
|||||
Deferred revenue, non-current |
202 |
346 |
|||||
Income taxes payable, non-current |
4,677 |
4,358 |
|||||
Deferred income taxes |
226 |
151 |
|||||
Other long-term liabilities |
2,665 |
2,924 |
|||||
Total liabilities |
28,461 |
32,436 |
|||||
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); 691,293 (Class A 296,992, Class B 47,437, Class C 346,864) and 694,790 (Class A 298,263, Class B 47,054, Class C 349,473) shares issued and outstanding |
36,307 |
39,609 |
|||||
Accumulated other comprehensive loss |
(2,402 |
) |
(746 |
) |
|||
Retained earnings |
105,131 |
118,237 |
|||||
Total stockholders’ equity |
139,036 |
157,100 |
|||||
Total liabilities and stockholders’ equity |
$ |
167,497 |
$ |
189,536 |
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2016 |
2017 |
2016 |
2017 |
||||||||||||
Revenues |
$ |
22,451 |
$ |
27,772 |
$ |
64,208 |
$ |
78,532 |
|||||||
Costs and expenses: |
|||||||||||||||
Cost of revenues |
8,699 |
11,148 |
24,477 |
31,316 |
|||||||||||
Research and development |
3,596 |
4,205 |
10,326 |
12,319 |
|||||||||||
Sales and marketing |
2,565 |
3,042 |
7,367 |
8,583 |
|||||||||||
General and administrative |
1,824 |
1,595 |
4,961 |
5,096 |
|||||||||||
European Commission fine |
0 |
0 |
0 |
2,736 |
|||||||||||
Total costs and expenses |
16,684 |
19,990 |
47,131 |
60,050 |
|||||||||||
Income from operations |
5,767 |
7,782 |
17,077 |
18,482 |
|||||||||||
Other income (expense), net |
278 |
197 |
216 |
693 |
|||||||||||
Income before income taxes |
6,045 |
7,979 |
17,293 |
19,175 |
|||||||||||
Provision for income taxes |
984 |
1,247 |
3,148 |
3,493 |
|||||||||||
Net income |
$ |
5,061 |
$ |
6,732 |
$ |
14,145 |
$ |
15,682 |
|||||||
Basic net income per share of Class A and B common stock and Class C capital stock |
$ |
7.36 |
$ |
9.71 |
$ |
20.59 |
$ |
22.65 |
|||||||
Diluted net income per share of Class A and B common stock and Class C capital stock |
$ |
7.25 |
$ |
9.57 |
$ |
20.26 |
$ |
22.30 |
Three Months Ended |
Nine Months Ended |
||||||||||||||
September 30, |
September 30, |
||||||||||||||
2016 |
2017 |
2016 |
2017 |
||||||||||||
Operating activities |
|||||||||||||||
Net income |
$ |
5,061 |
$ |
6,732 |
$ |
14,145 |
$ |
15,682 |
|||||||
Adjustments: |
|||||||||||||||
Depreciation and impairment of property and equipment |
1,377 |
1,561 |
3,803 |
4,272 |
|||||||||||
Amortization and impairment of intangible assets |
219 |
200 |
654 |
617 |
|||||||||||
Stock-based compensation expense |
1,860 |
1,820 |
4,857 |
5,832 |
|||||||||||
Deferred income taxes |
(245 |
) |
(296 |
) |
119 |
242 |
|||||||||
(Gain) loss on marketable and non-marketable investments, net |
(90 |
) |
76 |
204 |
160 |
||||||||||
Other |
26 |
65 |
117 |
99 |
|||||||||||
Changes in assets and liabilities, net of effects of acquisitions: |
|||||||||||||||
Accounts receivable |
(282 |
) |
(1,150 |
) |
(299 |
) |
(719 |
) |
|||||||
Income taxes, net |
473 |
914 |
2,153 |
(865 |
) |
||||||||||
Other assets |
(47 |
) |
(1,632 |
) |
114 |
(2,086 |
) |
||||||||
Accounts payable |
459 |
(61 |
) |
238 |
58 |
||||||||||
Accrued expenses and other liabilities |
809 |
1,434 |
338 |
3,121 |
|||||||||||
Accrued revenue share |
186 |
176 |
138 |
182 |
|||||||||||
Deferred revenue |
39 |
33 |
42 |
228 |
|||||||||||
Net cash provided by operating activities |
9,845 |
9,872 |
26,623 |
26,823 |
|||||||||||
Investing activities |
|||||||||||||||
Purchases of property and equipment |
(2,554 |
) |
(3,538 |
) |
(7,134 |
) |
(8,877 |
) |
|||||||
Proceeds from disposals of property and equipment |
197 |
27 |
226 |
81 |
|||||||||||
Purchases of marketable securities |
(25,371 |
) |
(39,033 |
) |
(70,959 |
) |
(78,709 |
) |
|||||||
Maturities and sales of marketable securities |
16,590 |
28,350 |
54,379 |
62,588 |
|||||||||||
Purchases of non-marketable investments |
(181 |
) |
(177 |
) |
(862 |
) |
(871 |
) |
|||||||
Maturities and sales of non-marketable investments |
91 |
97 |
189 |
215 |
|||||||||||
Cash collateral related to securities lending |
(2,065 |
) |
0 |
(2,428 |
) |
0 |
|||||||||
Investments in reverse repurchase agreements |
500 |
0 |
450 |
0 |
|||||||||||
Acquisitions, net of cash acquired, and purchases of intangible assets |
(252 |
) |
(130 |
) |
(324 |
) |
(273 |
) |
|||||||
Proceeds from collection of notes receivable |
0 |
0 |
0 |
1,419 |
|||||||||||
Net cash used in investing activities |
(13,045 |
) |
(14,404 |
) |
(26,463 |
) |
(24,427 |
) |
|||||||
Financing activities |
|||||||||||||||
Net payments related to stock-based award activities |
(815 |
) |
(1,018 |
) |
(2,425 |
) |
(3,111 |
) |
|||||||
Repurchases of capital stock |
0 |
0 |
(3,693 |
) |
(2,745 |
) |
|||||||||
Proceeds from issuance of debt, net of costs |
2,976 |
2,698 |
8,729 |
2,698 |
|||||||||||
Repayments of debt |
(3,250 |
) |
(2,706 |
) |
(10,051 |
) |
(2,762 |
) |
|||||||
Proceeds from sale of subsidiary shares |
0 |
320 |
0 |
800 |
|||||||||||
Net cash used in financing activities |
(1,089 |
) |
(706 |
) |
(7,440 |
) |
(5,120 |
) |
|||||||
Effect of exchange rate changes on cash and cash equivalents |
68 |
108 |
137 |
387 |
|||||||||||
Net decrease in cash and cash equivalents |
(4,221 |
) |
(5,130 |
) |
(7,143 |
) |
(2,337 |
) |
|||||||
Cash and cash equivalents at beginning of period |
13,627 |
15,711 |
16,549 |
12,918 |
|||||||||||
Cash and cash equivalents at end of period |
$ |
9,406 |
$ |
10,581 |
$ |
9,406 |
$ |
10,581 |
Three Months Ended September 30, 2017 |
|||
Net cash provided by operating activities |
$ |
9,872 |
|
Less: purchases of property and equipment |
(3,538 |
) |
|
Free cash flow |
$ |
6,334 |
Three Months Ended September 30, 2017 |
Three Months Ended September 30, 2017 |
||||||
YoY (using Q3'16's FX rates) |
QoQ (using Q2'17's FX rates) |
||||||
EMEA revenues (GAAP) |
$ |
9,097 |
$ |
9,097 |
|||
Exclude foreign exchange impact on Q3'17 revenues using Q3'16 rates |
(283 |
) |
N/A |
||||
Exclude foreign exchange impact on Q3'17 revenues using Q2'17 rates |
N/A |
(413 |
) |
||||
Exclude hedging impact recognized in Q3'17 |
161 |
161 |
|||||
EMEA constant currency revenues (non-GAAP) |
$ |
8,975 |
$ |
8,845 |
|||
Prior period EMEA revenues, excluding hedging impact (non-GAAP) |
$ |
7,288 |
$ |
8,557 |
|||
EMEA revenue growth (GAAP) |
23 |
% |
6 |
% |
|||
EMEA constant currency revenue growth (non-GAAP) |
23 |
% |
3 |
% |
|||
APAC revenues (GAAP) |
$ |
4,199 |
$ |
4,199 |
|||
Exclude foreign exchange impact on Q3'17 revenues using Q3'16 rates |
54 |
N/A |
|||||
Exclude foreign exchange impact on Q3'17 revenues using Q2'17 rates |
N/A |
(44 |
) |
||||
Exclude hedging impact recognized in Q3'17 |
18 |
18 |
|||||
APAC constant currency revenues (non-GAAP) |
$ |
4,271 |
$ |
4,173 |
|||
Prior period APAC revenues, excluding hedging impact (non-GAAP) |
$ |
3,248 |
$ |
3,719 |
|||
APAC revenue growth (GAAP) |
29 |
% |
13 |
% |
|||
APAC constant currency revenue growth (non-GAAP) |
31 |
% |
12 |
% |
|||
Other Americas revenues (GAAP) |
$ |
1,546 |
$ |
1,546 |
|||
Exclude foreign exchange impact on Q3'17 revenues using Q3'16 rates |
(26 |
) |
N/A |
||||
Exclude foreign exchange impact on Q3'17 revenues using Q2'17 rates |
N/A |
(30 |
) |
||||
Exclude hedging impact recognized in Q3'17 |
12 |
12 |
|||||
Other Americas constant currency revenues (non-GAAP) |
$ |
1,532 |
$ |
1,528 |
|||
Prior period Other Americas revenues, excluding hedging impact (non-GAAP) |
$ |
1,161 |
$ |
1,409 |
|||
Other Americas revenue growth (GAAP) |
33 |
% |
9 |
% |
|||
Other Americas constant currency revenue growth (non-GAAP) |
32 |
% |
8 |
% |
|||
United States revenues (GAAP) |
$ |
12,930 |
$ |
12,930 |
|||
United States revenue growth (GAAP) |
21 |
% |
5 |
% |
|||
Revenues (GAAP) |
$ |
27,772 |
$ |
27,772 |
|||
Constant currency revenues (non-GAAP) |
$ |
27,708 |
$ |
27,476 |
|||
Prior period revenues, excluding hedging impact (non-GAAP) |
$ |
22,346 |
$ |
26,007 |
|||
Revenue growth (GAAP) |
24 |
% |
7 |
% |
|||
Constant currency revenue growth (non-GAAP) |
24 |
% |
6 |
% |
Three Months Ended |
|||||||
September 30, |
|||||||
2016 |
2017 |
||||||
Interest income |
$ |
318 |
$ |
306 |
|||
Interest expense |
(29 |
) |
(27 |
) |
|||
Foreign currency exchange losses, net |
(123 |
) |
(53 |
) |
|||
Gain (loss) on marketable securities, net |
50 |
(44 |
) |
||||
Gain (loss) on non-marketable investments, net |
40 |
(32 |
) |
||||
Other |
22 |
47 |
|||||
Other income (expense), net |
$ |
278 |
$ |
197 |
Three Months Ended |
|||||||
September 30, |
|||||||
2016 |
2017 |
||||||
Revenues: |
|||||||
Google |
$ |
22,254 |
$ |
27,470 |
|||
Other Bets |
197 |
302 |
|||||
Total revenues |
$ |
22,451 |
$ |
27,772 |
|||
Operating income (loss): |
|||||||
Google |
$ |
6,774 |
$ |
8,744 |
|||
Other Bets |
(861 |
) |
(812 |
) |
|||
Reconciling items(1)
|
(146 |
) |
(150 |
) |
|||
Total income from operations |
$ |
5,767 |
$ |
7,782 |
|||
Stock-based compensation(2):
|
|||||||
Google |
$ |
1,629 |
$ |
1,654 |
|||
Other Bets |
199 |
130 |
|||||
Reconciling items(1)
|
32 |
36 |
|||||
Total stock-based compensation |
$ |
1,860 |
$ |
1,820 |
|||
Capital expenditures: |
|||||||
Google |
$ |
2,434 |
$ |
3,559 |
|||
Other Bets |
324 |
77 |
|||||
Reconciling items(3)
|
(204 |
) |
(98 |
) |
|||
Total capital expenditures |
$ |
2,554 |
$ |
3,538 |
|||
Depreciation, amortization, and impairment: |
|||||||
Google |
$ |
1,488 |
$ |
1,667 |
|||
Other Bets |
104 |
94 |
|||||
Reconciling items(1)
|
4 |
0 |
|||||
Total depreciation, amortization, and impairment |
$ |
1,596 |
$ |
1,761 |
(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, SBC represents awards that we expect to settle in Alphabet stock. |
(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. |