When confidence is down and budgets are tight, marketers focus on what they know works. It's a way of editing the media plan and rebuilding the strategy, and the greater the challenge ahead, the greater the shift. So today's financial results for the Google's first quarter (ending March 31, 09) should be no surprise. While print ad volumes were down 26% quarter on quarter, Google saw only slight decline, with like for like year-on-year revenues enjoying modest growth at 6%. It was "a good quarter given the depth of the recession, underlining both the resilience of our business model and the ongoing potential of the web as users and advertisers shift online," said a confident Schmidt. And in a sector where it's all about the product, their focus forwards is both perfectly smart and a depressing contrast to most of the media and apps industries: "our priority remains investing for the long term to drive future growth in our core and emerging businesses."
Q1 Financials
- Revenues of $5.51 billion for the quarter ended March 31, 2009
- Increase of 6% compared to the first quarter of 2008 and a decrease of 3% compared to the fourth quarter of 2008
- Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC).
- First quarter TAC totaled $1.44 billion, or 27% of advertising revenues.
- Operating income, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis announced GAAP operating income for the first quarter of 2009 was $1.88 billion, or 34% of revenues. This compares to GAAP operating income of $1.86 billion, or 33% of revenues, in the fourth quarter of 2008. Non- GAAP operating income in the first quarter of 2009 was $2.16 billion, or 39% of revenues. This compares to non-GAAP operating income of $2.15 billion, or 38% of revenues, in the fourth quarter of 2008. * GAAP net income for the first quarter of 2009 was $1.42 billion as compared to $382 million in the fourth quarter of 2008.
- Non-GAAP net income in the first quarter of 2009 was $1.64 billion, compared to $1.62 billion in the fourth quarter of 2008. * GAAP EPS for the first quarter of 2009 was $4.49 on 317 million diluted shares outstanding, compared to $1.21 for the fourth quarter of 2008 on 317 million diluted shares outstanding.
- Non-GAAP EPS in the first quarter of 2009 was $5.16, compared to $5.10 in the fourth quarter of 2008.
- Non-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC). Non-GAAP net income and non-GAAP EPS exclude the expenses related to SBC, the non- cash impairment charges primarily related to our investments in AOL and Clearwire, and related tax benefits. In the first quarter of 2009, the charge related to SBC was $277 million as compared to $286 million in the fourth quarter of 2008. Also, in the fourth quarter of 2008, we recognized $1.09 billion in asset impairment charges related primarily to our investments in AOL and Clearwire. The tax benefit related to SBC was $64 million in the first quarter of 2009 and $65 million in the fourth quarter of 2008. The tax benefit related to the impairment charges was $82 million in the fourth quarter of 2008. Reconciliations of non-GAAP measures to GAAP operating income, operating margin, net income, and EPS are included at the end of this release.
Q1 Financial Highlights
Revenues – Google reported revenues of $5.51 billion in the first quarter of 2009, representing a 6% increase over first quarter 2008 revenues of $5.19 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 $3.70 billion, or 67% of total revenues, in the first quarter of 2009. This represents a 9% increase over first quarter 2008 revenues of $3.40 billion and a 3% decrease from fourth quarter 2008 revenues of $3.81 billion.
Google Network Revenues – Google’s partner sites generated revenues, through AdSense programs, of $1.64 billion, or 30% of total revenues, in the first quarter of 2009. This represents a 3% decrease from first quarter 2008 network revenues of $1.69 billion and a 3% decrease from fourth quarter 2008 network revenues of $1.69 billion.
International Revenues – Revenues from outside of the United States totaled $2.88 billion, representing 52% of total revenues in the first quarter of 2009, compared to 51% in the first quarter of 2008 and 50% in the fourth quarter of 2008. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2008 through the first quarter of 2009, our revenues in the first quarter of 2009 would have been $120 million higher.
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