February 2008
MOUNTAIN VIEW, Calif. - Google Inc., announced financial results for the quarter and fiscal year ended December 31, 2007.
"We're very pleased with our performance this quarter," said Eric Schmidt, CEO of Google.
"It reflects strong momentum in our core business, growing receptivity to our new business initiatives, and improved discipline in managing our operating expenses."
Q4 Financial Summary
Google reported revenues of $4.83 billion for the quarter ended December 31, 2007, an increase of 51% compared to the fourth quarter of 2006 and an increase of 14% compared to the third quarter of 2007.
Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs, or TAC. In the fourth quarter of 2007, TAC totaled $1.44 billion, or 30% of advertising revenues.
Google reports operating income, net income, and earnings per share (EPS) 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 in the accompanying financial tables.
GAAP operating income for the fourth quarter of 2007 was $1.44 billion, or 30% of revenues. This compares to GAAP operating income of $1.32 billion, or 31% of revenues, in the third quarter of 2007.
Non-GAAP operating income in the fourth quarter of 2007 was $1.69 billion, or 35% of revenues. This compares to non-GAAP operating income of $1.52 billion, or 36% of revenues, in the third quarter of 2007.
GAAP net income for the fourth quarter of 2007 was $1.21 billion as compared to $1.07 billion in the third quarter of 2007. Non-GAAP net income in the fourth quarter of 2007 was $1.41 billion, compared to $1.24 billion in the third quarter of 2007.
GAAP EPS for the fourth quarter of 2007 was $3.79 on 318 million diluted shares outstanding, compared to $3.38 for the third quarter of 2007 on 317 million diluted shares outstanding.
Non-GAAP EPS in the fourth quarter of 2007 was $4.43, compared to $3.91 in the third quarter of 2007.
Non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP EPS are computed net of stock-based compensation (SBC).
In the fourth quarter of 2007, the charge related to SBC was $245 million as compared to $198 million in the third quarter of 2007. Tax benefits related to SBC have also been excluded from these non-GAAP measures.
The tax benefit related to SBC was $42 million in the fourth quarter of 2007 and $31 million in the third quarter of 2007. Reconciliations of non-GAAP measures to GAAP operating income, operating margin, net income, and EPS are included at the end of this release.
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