Podsumowanie 1 kwartau Google:


MOUNTAIN VIEW, Calif. – April 20, 2006 – Google Inc. (NASDAQ: GOOG)
today announced financial results for the quarter ended March 31, 2006.

„Google had an exceptional quarter with strong growth and
profitability, from both Google properties and the network,” said
Eric Schmidt, CEO of Google. „We are driving this growth through
investments in our infrastructure and our people, product innovations
that attract new users, and relationships with advertisers and partners
around the world. The strength of our business model gives us the
opportunity to invest in our business, allowing us to maintain and grow
our market leadership.”

Q1 Financial Summary
Google reported revenues of $2.25 billion for the quarter ended March
31, 2006, an increase of 79% compared to the first quarter of 2005 and
an increase of 17% compared to the fourth quarter of 2005. Google
reports its revenues, consistent with GAAP, on a gross basis without
deducting traffic acquisition costs, or TAC. In the first quarter of
2006, TAC totaled $723 million, or 32% 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 are
described below and reconciled to the corresponding GAAP measures in
the section below titled „About non-GAAP financial measures.”
· GAAP operating income for the first quarter of 2006 was $743
million, or 33% of revenues. This compares to GAAP operating income of
$570 million, or 30% of revenues, in the fourth quarter of 2005.
Non-GAAP operating income in the first quarter was $887 million, or 39%
of revenues. This compares to non-GAAP operating income of $718
million, or 37% of revenues, in the fourth quarter.

· GAAP net income for the first quarter was $592 million as compared
to $372 million in the fourth quarter. Non-GAAP net income was $697
million, compared to $469 million in the fourth quarter.

· GAAP EPS for the first quarter was $1.95 on 304 million diluted
shares outstanding, compared to $1.22 for the fourth quarter, on 304
million diluted shares outstanding. Non-GAAP EPS was $2.29, compared
to $1.54 in the fourth quarter.

· Non-GAAP operating income, non-GAAP net income, and non-GAAP EPS in
the first quarter of 2006 are computed net of certain material items:
stock-based compensation (SBC) and estimated plaintiffs’ attorneys’
fees related to the proposed settlement of the Lane’s Gift class
action lawsuit. In the first quarter, the charge related to
stock-based compensation was $115 million as compared to $58 million in
the fourth quarter of 2005, which also was excluded from non-GAAP
calculations. Plaintiffs’ attorneys’ fees related to the proposed
Lane’s Gift class-action lawsuit settlement are estimated to be $30
million. In the fourth quarter of 2005, the contribution to the Google
Foundation of $90 million was excluded from the calculation of non-GAAP
operating income, non-GAAP net income, and non-GAAP EPS. Tax benefits
related to SBC charges, the estimated plaintiffs’ attorneys’ fees,
and the contribution to the Google Foundation have been excluded from
non-GAAP calculations. The tax benefit related to SBC was $27 million
in the first quarter and $14 million in the fourth quarter. The tax
benefit related to the estimated plaintiffs’ attorneys’ fees in the
first quarter was $12 million. The tax benefit related to the
contribution to the Google Foundation in the fourth quarter was $37
million. Reconciliations of non-GAAP measures to GAAP operating
income, net income, and EPS are included at the end of this release.

Q1 Financial Highlights

Revenues – Google reported revenues of $2.25 billion for the quarter
ended March 31, 2006, representing a 79% increase over first quarter
2005 revenues of $1.26 billion, and a 17% increase over fourth quarter
2005 revenues of $1.92 billion. Google reports its revenues,
consistent with GAAP, on a gross basis without deducting traffic
acquisition costs, or TAC.

Google Sites Revenues – Google-owned sites generated revenues of $1.30
billion, or 58% of total revenues. This represents a 97% increase over
first quarter 2005 revenues of $657 million and an 18% increase over
fourth quarter 2005 revenues of $1.10 billion.

Google Network Revenues – Google’s partner sites generated revenues,
through AdSense programs, of $928 million, or 41% of total revenues.
This is a 59% increase over network revenues of $584 million generated
in the first quarter of 2005 and a 16% increase over fourth quarter
2005 revenues of $799 million.

International Revenues – Revenues from outside of the United States
contributed 42% of total revenues, compared to 38% in the fourth
quarter of 2005 and 39% in the first quarter of 2005. Foreign exchange
rates had an immaterial impact on sequential international revenue
growth. Had foreign exchange rates remained constant from the first
quarter of 2005 through the first quarter of 2006, our international
revenues would have been $65 million higher.

TAC – Traffic Acquisition Costs, the portion of revenues shared with
Google’s partners, increased to $723 million in the first quarter.
This compares to TAC of $629 million in the fourth quarter. TAC as a
percentage of advertising revenues decreased to 32% in the first
quarter from 33% in the fourth quarter.

Other Cost of Revenues – Other cost of revenues, which is comprised
primarily of data center operational expenses, including depreciation
expense, as well as credit card processing charges, increased to $181
million, or 8% of revenues, in the first quarter, compared to $148
million, or 8% of revenues, in the fourth quarter. Other cost of
revenues also included stock-based compensation of $2 million in both
the first quarter of 2006 and the fourth quarter of 2005.

Operating Expenses – Operating expenses, other than costs of revenues,
were $607 million in the first quarter. Operating expenses included
$284 million in headcount-related and facilities expenses, $112 million
in stock-based compensation, and $50 million in advertising and
promotional expenses, of which $25 million was related to distribution
deals. In addition, stock-based compensation and estimated
plaintiffs’ attorneys’ fees related to the Lane’s Gift
class-action lawsuit of $30 million are included in operating expenses,
but excluded from non-GAAP calculations.

Stock-Based Compensation – In accordance with a new accounting rule,
FASB Staff Accounting Bulletin No. 107, stock-based compensation is no
longer presented as a separate line on our income statement. The
stock-based compensation is now presented in the same lines as cash
compensation paid to the same individuals. Stock-based compensation
recognized in prior periods has been reclassed to conform with the
presentation in the current period. In the first quarter, the charge
related to stock-based compensation was $115 million as compared to $58
million in the fourth quarter. The increase in stock-based
compensation was primarily related to the adoption of FAS 123R related
to stock-based options expensing.

For the full year, we expect stock-based compensation charges for
grants to employees prior to April 1, 2006 to be $370 million. This
does not include expenses to be recognized over the remainder of the
year related to employee stock awards that are granted after April 1,
2006 or non-employee stock awards that have been or may be granted. We
currently anticipate that dilution related to all equity grants to
employees will be approximately 1% to 1.5% per year.

Operating Income – GAAP operating income in the first quarter was $743
million, or 33% of revenues. This compares to GAAP operating income of
$570 million, or 30% of revenues, in the fourth quarter. GAAP
operating income includes stock-based compensation, the estimated
plaintiffs’ attorneys’ fees related to the proposed settlement of
the Lane’s Gift lawsuit of $30 million in the first quarter, and the
contribution of $90 million to the Google Foundation in the fourth
quarter. Non-GAAP operating income in the first quarter was $887
million, or 39% of revenues. This compares to non-GAAP operating income
of $718 million, or 37% of revenues, in the fourth quarter.

Net Income – GAAP net income for the first quarter was $592 million
as compared to $372 million in the fourth quarter. Non-GAAP net income
was $697 million, compared to $469 million in the fourth quarter. GAAP
EPS for the first quarter was $1.95 on 304 million diluted shares
outstanding, compared to $1.22 for the fourth quarter, on 304 million
diluted shares outstanding. Non-GAAP EPS was $2.29, compared to $1.54
in the fourth quarter.

The share count of 304 million is as of March 31 and does not include
5.3 million shares issued in the offering completed early in the second
quarter. The additional shares will be reflected in the second quarter
2006 share calculations and in subsequent quarters.

Income Taxes – Our effective tax rate for the first quarter was 27%.
We expect our effective tax rate for 2006 to be approximately 30%.

Cash Flow and Capital Expenditures – Net cash provided by operating
activities for the first quarter totaled $825 million as compared to
$658 million for the fourth quarter. In the first quarter of 2006,
capital expenditures were $345 million. Free cash flow, an alternative
non-GAAP measure of liquidity, is defined as net cash provided by
operating activities less capital expenditures. In the first quarter
we generated $480 million in free cash flow.
We expect that the growth rate in capital expenditures in 2006 will be
substantially greater than the revenue growth rate for the year. We
expect the majority of investment to be focused on IT infrastructure
including servers, networking equipment, and data centers, as well as
real estate and campus facilities.
In accordance with FAS 123R, excess tax benefits related to stock-based
compensation, which totaled $77 million in the first quarter, are now
classified as a cash flow from financing activities, rather than as a
cash flow from operating activities. This requirement will reduce the
amounts we record as net cash provided by operating activities and free
cash flow, and will increase the amount we record as net cash provided
by financing activities. Total cash flow will remain unchanged from
what would have been reported under prior accounting rules.

Reconciliations of free cash flow to net cash provided by operating
activities, the GAAP measure of liquidity, are included at the end of
this release.

Cash – As of March 31, 2006, cash, cash equivalents, and marketable
securities were $8.43 billion. This balance does not reflect the
additional $2.07 billion raised in the offering that closed in early
April.

We also completed the investment of $1 billion in AOL in early April,
and the balance of $8.43 billion does not reflect the impact of the
cash investment.

On a worldwide basis, Google employed 6,790 full-time employees as of
March 31, 2006, up from 5,680 full time employees as of December 31,
2005.

WEBCAST AND CONFERENCE CALL INFORMATION

A live audio webcast of Google’s first quarter 2006 earnings release
call will be available at http://investor.google.com/news.html. The
call begins today at 1:30 PM (PT) / 4:30 PM (ET). This press release,
the financial tables, as well as other supplemental information
including the reconciliations of certain non-GAAP measures to their
nearest comparable GAAP measures, are also available at that site. A
replay of the call will be available beginning at 7:30 PM (ET) through
midnight Thursday, April 27, 2006 by calling 888-203-1112 in the United
States or 719-457-0820 for calls from outside the United States. The
required confirmation code for the replay is 5907541.

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements that involve
risks and uncertainties, including statements relating to our plans to
invest in our business, our expected stock-based compensation, the
expected dilution related to equity grants to our employees, our
anticipated effective tax rate for 2006, and planned capital
expenditures. Actual results may differ materially from the results
predicted and reported results should not be considered as an
indication of future performance. The potential risks and
uncertainties that could cause actual results to differ from the
results predicted include, among others, risks related to our
international operations, our hiring patterns, the amount of
stock-based compensation we issue to our service providers, the mix of
our US revenue as compared to our non-US revenue, the uncertain and
complex nature of tax forecasting, the fact that we may have exposure
to greater than expected tax liabilities, and our need to expend
capital to accommodate the growth of the business, as well as those
risks and uncertainties included under the captions „Factors That
Could Affect Future Results” and „Management’s Discussion and
Analysis of Financial Condition and Results of Operations,” in our
report on Form 10-K for the year ended December 31, 2005, which is on
file with the SEC and is available on our investor relations website at
investor.google.com and on the SEC’s website at www.sec.gov.
Additional information will also be set forth in our quarterly report
on Form 10-Q for the quarter ended March 31, 2006, which will be filed
with the SEC in the second quarter of 2006. All information provided
in this release and in the attachments is as of April 20, 2006, and
Google undertakes no duty to update this information.

ABOUT NON-GAAP FINANCIAL MEASURES

To supplement Google’s consolidated financial statements presented in
accordance with GAAP, Google uses the following measures defined as
non-GAAP financial measures by the SEC: non-GAAP operating income,
non-GAAP net income, non-GAAP operating margins, non-GAAP EPS and free
cash flow. The presentation of this financial information is not
intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with GAAP.
For more information on these non-GAAP financial measures, please see
the tables captioned „Reconciliations of non-GAAP results of
operations measures to the nearest comparable GAAP measures” and
„Reconciliation from net cash provided by operating activities to
free cash flow” included at the end of this release.

Google’s management believes that these non-GAAP financial measures
provide meaningful supplemental information regarding our performance
and liquidity by excluding certain expenses and expenditures that may
not be indicative of our core business operating results. Google
believes that both management and investors benefit from referring to
these non-GAAP financial measures in assessing Google’s performance
and when planning, forecasting and analyzing future periods. These
non-GAAP financial measures also facilitate management’s internal
comparisons to Google’s historical performance and liquidity and our
competitors’ operating results. Google believes these non-GAAP
financial measures are useful to investors in allowing for greater
transparency with respect to supplemental information used by
management in its financial and operational decision making.

Google has computed its non-GAAP financial measures using the same
consistent method from quarter to quarter and year to year. The
accompanying tables have more details on the GAAP financial measures
that are most directly comparable to non-GAAP financial measures and
the related reconciliations between these financial measures.

Media Contact: Investor Contact:
Jon Murchinson, 650-253-4437 Maria Shim, 650-253-7663
[email protected] [email protected]

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