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Google Announces Second Quarter 2012 Financial Results

[Techtaffy Newsdesk]

Google announced financial results for the quarter ended June 30, 2012. Before we share the results with you, a couple of quick notes. As usual, Google says it expects to “make significant capital expenditures.” In the second quarter of 2012, Google’s capital expenditures amounted to $774 million, the majority of which was related to IT infrastructure investments, including data centers, servers, and networking equipment.

The company’s headcount almost doubled from a year ago, as employees from Motorola Mobility get integrated into the Google fold. On a worldwide basis, Google now employs 54,604 full-time employees (34,311 Google employees, and 20,293 Motorola employees) as of June 30, 2012, compared to 33,077 full-time employees as of March 31, 2012. Last but not the least, Google’s cash reserves remained steady at $43.1 billion.

Q2 Financial Summary

Google  reported consolidated revenues of $12.21 billion for the quarter ended June 30, 2012, an increase of 35% compared to the second quarter of 2011. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the second quarter of 2012, TAC totaled $2.60 billion, or 25% of advertising revenues.

Operating income in the second quarter of 2012 was $3.20 billion, or 26% of revenues. This compares to operating income of $2.88 billion, or 32% of revenues, in the second quarter of 2011.

Net income in the second quarter of 2012 was $2.79 billion, compared to $2.51 billion in the second quarter of 2011.

EPS in the second quarter of 2012 was $8.42 on 331 million diluted shares outstanding, compared to $7.68 in the second quarter of 2011 on 326 million diluted shares outstanding.

Q2 Financial Highlights

Revenues and Other Information – On a consolidated basis, Google revenues for the quarter ended June 30, 2012 was $12.21 billion, an increase of 35% compared to the second quarter of 2011.

Google Revenues (advertising and other)– Google revenues were $10.96 billion, or 90% of consolidated revenues, in the second quarter of 2012, representing a 21% increase over second quarter 2011 revenues of $9.03 billion.

Google Sites Revenues – Google-owned sites generated revenues of $7.54 billion, or 69% of Google revenues, in the second quarter of 2012. This represents a 21% increase over second quarter 2011 Google sites revenues of $6.23 billion.

Google Network Revenues – Google’s partner sites generated revenues of $2.98 billion, or 27% of Google revenues, in the second quarter of 2012. This represents a 20% increase from second quarter 2011 Google network revenues of $2.48 billion.

Google International Revenues – Google revenues from outside of the United States totaled $5.96 billion, representing 54% of Google revenues in the second quarter of 2012, compared to 54% in the first quarter of 2012 and 54% in the second quarter of 2011.

Google revenues from the United Kingdom totaled $1.18 billion, representing 11% of Google revenues in the second quarter of 2012, compared to 11% in the second quarter of 2011.

In the second quarter of 2012, Google recognized a benefit of $81 million to Google revenues through the company’s foreign exchange risk management program, compared to $4 million in the second quarter of 2011.

Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of Google network members, increased approximately 42% over the second quarter of 2011 and increased approximately 1% over the first quarter of 2012.

Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of its network members, decreased approximately 16% over the second quarter of 2011 and increased approximately 1% over the first quarter of 2012.

TAC – Traffic acquisition costs, the portion of revenues shared with Google’s partners, increased to $2.60 billion in the second quarter of 2012, compared to $2.11 billion in the second quarter of 2011. TAC as a percentage of advertising revenues was 25% in the second quarter of 2012, compared to 24% in the second quarter of 2011.

Motorola Revenues (hardware and other) – Motorola revenues were $1.25 billion ($843 million from the mobile segment and $407 million from the home segment), or 10% of consolidated revenues in the second 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 $2.41 billion, or 20% of revenues, in the second quarter of 2012, compared to $1.06 billion, or 12% of revenues, in the second quarter of 2011.

Operating Expenses – Operating expenses, other than cost of revenues, were $4.0 billion in the second quarter of 2012, or 33% of revenues, compared to $2.97 billion in the second quarter of 2011, or 33% of revenues.

Stock-Based Compensation (SBC) – In the second quarter of 2012, the total charge related to SBC was $658 million, of which $93 million was related to severance and benefit arrangements in connection with the Motorola acquisition, compared to $435 million in the second quarter of 2011.

Operating Income – On a consolidated basis, operating income in the second quarter of 2012 was $3.20 billion, or 26% of revenues. This compares to operating income of $2.88 billion, or 32% of revenues, in the second quarter of 2011.

Google Operating Income – Operating income for Google was $3.44 billion, or 31% of Google revenues, in the second quarter of 2012. This compares to GAAP operating income of $2.88 billion, or 32% of Google revenues, in the second quarter of 2011.

Motorola Operating Loss – Operating loss for Motorola was $233 million ($192 million for the mobile segment and $41 million for the home segment), or -19% of Motorola revenues in the second quarter of 2012.

Income Taxes –Google’s effective tax rate was 19% for the second quarter of 2012.

Net Income – Net income in the second quarter of 2012 was $2.79 billion, compared to $2.51 billion in the second quarter of 2011. EPS in the second quarter of 2012 was $8.42 on 331 million diluted shares outstanding, compared to $7.68 in the second quarter of 2011 on 326 million diluted shares outstanding.

[Image Courtesy: Google]

 

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