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"Today Google reported its first quarter earnings. It had revenues of $10.65 billion, profits of $2.89 billion, earnings per share of $10.08, and diluted earnings per share of $8.75. That earnings per share figure compares favorable to the year-ago, Q1 number from 2011 of $5.51.\r\n\r\nGoogle's shares were up on the day, booking a more than 2% increase. Google has $49.3 in cash at the end of the quarter. The company has hired 600 people thus far in 2012. A critical metric, the cost per click of advertisements, declined 12%. The decline was expected. However, balancing out that decline was a\u00A039% rise in paid clicks from the same quarter in 2011. Prices were lower, but Google made it up on volume.\r\n\r\nFrom the company's perspective, the quarter was strong: &amp;quot;Google had another great quarter with revenues up 24% year on year,\u201D\u00A0said its CEO.\r\n\r\nSome 54% of the company's revenues were made\u00A0internationally. Both Google's core site revenues, and network revenues, saw double-digit growth, up 24% and 20% respectively. Critically, Google has approved both a dividend and a 2-1 stock split. The press release announcing the earnings noted that this would result in no change in the 'governance structure' of the company.\r\n\r\nGoogle's stock was up 1.1% in after hours trading, at the time of writing. Google did report that its effective tax rate of 18% for the time period.\r\n\r\nWhat follows is Google's full announcement:\r\nGoogle had another great quarter with revenues up 24% year on year,\u201D said Larry Page, CEO of Google.\u00A0 \u201CWe also saw tremendous momentum from the big bets we\u2019ve made in products like Android, Chrome and YouTube. We are still at the very early stages of what technology can do to improve people's lives and we have enormous opportunities ahead.\u00A0 It is a very exciting time to be at Google.\u201D\r\n\r\nGoogle announced today that its Board of Directors unanimously approved a stock dividend proposal designed to preserve the corporate structure that has allowed Google to remain focused on the long term. More information is available on our\u00A0Investor Relations site, including a\u00A0letter\u00A0from our founders Larry Page and Sergey Brin explaining the proposal, and in our forthcoming proxy statement.\r\n\r\nQ1 Financial Summary\r\n\r\nGoogle reported revenues of $10.65 billion for the quarter ended March 31, 2012, an increase of 24% compared to the first quarter of 2011. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the first quarter of 2012, TAC totaled $2.51 billion, or 25% of advertising revenues.\r\n\r\nGoogle reports operating income, operating margin, 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 at the end of this release.\r\n\r\n\tGAAP operating income in the first quarter of 2012 was $3.39 billion, or 32% of revenues. This compares to GAAP operating income of $2.30 billion, or 27% of revenues, in the first quarter of 2011. Non-GAAP operating income in the first quarter of 2012 was $3.94 billion, or 37% of revenues. This compares to non-GAAP operating income of $3.23 billion, or 38% of revenues, in the first quarter of 2011.\r\n\tGAAP net income in the first quarter of 2012 was $2.89 billion, compared to $1.80 billion in the first quarter of 2011. Non-GAAP net income in the first quarter of 2012 was $3.33 billion, compared to $2.64 billion in the first quarter of 2011.\r\n\tGAAP EPS in the first quarter of 2012 was $8.75 on 330 million diluted shares outstanding, compared to $5.51 in the first quarter of 2011 on 326 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2012 was $10.08, compared to $8.08 in the first quarter of 2011.\r\n\tNon-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC) and a charge related to the resolution of a Department of Justice investigation in the first quarter of 2011. Non-GAAP net income and non-GAAP EPS exclude the expenses noted above, net of the related tax benefits. In the first quarter of 2012, the charge related to SBC and related tax benefits were $556 million and $118 million compared to $432 million and $92 million in the first quarter of 2011. In the first quarter of 2011, the charge related to the resolution of the Department of Justice investigation was $500 million. We recognized no tax benefit for the charge related to the resolution of the Department of Justice investigation. Reconciliations of non-GAAP measures to GAAP operating income, operating margin, net income, and EPS are included at the end of this release.\r\n\r\nQ1 Financial Highlights\r\n\r\nRevenues\u00A0\u2013 Google reported revenues of $10.65 billion in the first quarter of 2012, representing a 24% increase over first quarter 2011 revenues of $8.58 billion. Google reports its revenues, consistent with GAAP, on a gross basis without deducting TAC.\r\n\r\nGoogle Sites Revenues\u00A0- Google-owned sites generated revenues of $7.31 billion, or 69% of total revenues, in the first quarter of 2012. This represents a 24% increase over first quarter 2011 revenues of $5.88 billion.\r\n\r\nGoogle Network Revenues\u00A0- Google\u2019s partner sites generated revenues of $2.91 billion, or 27% of total revenues, in the first quarter of 2012. This represents a 20% increase from first quarter 2011 network revenues of $2.43 billion.\r\n\r\nInternational Revenues\u00A0- Revenues from outside of the United States totaled $5.77 billion, representing 54% of total revenues in the first quarter of 2012, compared to 53% in the fourth quarter of 2011 and 53% in the first quarter of 2011. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2011 through the first quarter of 2012, our revenues in the first quarter of 2012 would have been $79 million higher. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2011 through the first quarter of 2012, our revenues in the first quarter of 2012 would have been $67 million higher.\r\n\r\n\tRevenues from the United Kingdom totaled $1.15 billion, representing 11% of revenues in the first quarter of 2012, compared to 11% in the first quarter of 2011.\r\n\tIn the first quarter of 2012, we recognized a benefit of $37 million to revenues through our foreign exchange risk management program, compared to $14 million in the first quarter of 2011.\r\n\r\nA reconciliation of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues is included at the end of this release.\r\n\r\nPaid Clicks\u00A0\u2013 Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 39% over the first quarter of 2011 and increased approximately 7% over the fourth quarter of 2011.\r\n\r\nCost-Per-Click\u00A0\u2013 Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 12% over the first quarter of 2011 and decreased approximately 6% over the fourth quarter of 2011.\r\n\r\nTAC\u00A0- Traffic acquisition costs, the portion of revenues shared with Google\u2019s partners, increased to $2.51 billion in the first quarter of 2012, compared to TAC of $2.04 billion in the first quarter of 2011. TAC as a percentage of advertising revenues was 25% in the first quarter of 2012, compared to 25% in the first quarter of 2011.\r\n\r\nThe majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.04 billion in the first quarter of 2012. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $468 million in the first quarter of 2012.\r\n\r\nOther Cost of Revenues\u00A0- Other cost of revenues, which is comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs, and credit card processing charges increased to $1.28 billion, or 12% of revenues, in the first quarter of 2012, compared to $897 million, or 10% of revenues, in the first quarter of 2011.\r\n\r\nOperating Expenses\u00A0- Operating expenses, other than cost of revenues, were $3.47 billion in the first quarter of 2012, or 33% of revenues, compared to $3.34 billion in the first quarter of 2011, or 39% of revenues.\r\n\r\nStock-Based Compensation (SBC)\u00A0\u2013 In the first quarter of 2012, the total charge related to SBC was $556 million, compared to $432 million in the first quarter of 2011.\r\n\r\nWe currently estimate SBC charges for grants to employees prior to March 31, 2012 to be approximately $2 billion for 2012. This estimate does not include expenses to be recognized related to employee stock awards that are granted after March 31, 2012 or non-employee stock awards that have been or may be granted.\r\n\r\nOperating Income\u00A0\u2013 GAAP operating income in the first quarter of 2012 was $3.39 billion, or 32% of revenues. This compares to GAAP operating income of $2.30 billion, or 27% of revenues, in the first quarter of 2011. Non-GAAP operating income in the first quarter of 2012 was $3.94 billion, or 37% of revenues. This compares to non-GAAP operating income of $3.23 billion, or 38% of revenues, in the first quarter of 2011.\r\n\r\nInterest and Other Income, Net\u00A0\u2013 Interest and other income, net increased to $156 million in the first quarter of 2012, compared to $96 million in the first quarter of 2011.\r\n\r\nIncome Taxes\u00A0\u2013 Our effective tax rate was 18% for the first quarter of 2012.\r\n\r\nNet Income\u00A0\u2013 GAAP net income in the first quarter of 2012 was $2.89 billion, compared to $1.80 billion in the first quarter of 2011. Non-GAAP net income was $3.33 billion in the first quarter of 2012, compared to $2.64 billion in the first quarter of 2011. GAAP EPS in the first quarter of 2012 was $8.75 on 330 million diluted shares outstanding, compared to $5.51 in the first quarter of 2011 on 326 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2012 was $10.08, compared to $8.08 in the first quarter of 2011.\r\n\r\nCash Flow and Capital Expenditures\u00A0\u2013 Net cash provided by operating activities in the first quarter of 2012 totaled $3.69 billion, compared to $3.17 billion in the first quarter of 2011. In the first quarter of 2012, capital expenditures were $607 million, the majority of which was related to IT infrastructure investments, including data centers, servers, and networking equipment. 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 of 2012, free cash flow was $3.09 billion.\r\n\r\nWe expect to continue to make significant capital expenditures.\r\n\r\nA reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.\r\n\r\nCash\u00A0\u2013 As of March 31, 2012, cash, cash equivalents, and short-term marketable securities were $49.3 billion.\r\n\r\nHeadcount\u00A0\u2013 On a worldwide basis, Google employed 33,077 full-time employees as of March 31, 2012, up from 32,467 full-time employees as of December 31, 2011."^^<http://www.w3.org/2001/XMLSchema#string>
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