Google Management Discusses Q1 2012 Results - Earnings Call Transcript

Google (GOOG)

Q1 2012 Earnings Call

April 12, 2012 4:30 pm ET

Executives

Jane Penner -

Larry Page - Co-Founder, Chief Executive officer, Director, Member of Acquisition Committee and Member of Executive Committee

David C. Drummond - Chief Legal Officer, Senior Vice President of Corporate Development and Secretary

Patrick Pichette - Chief Financial Officer, Principal Accounting Officer and Senior Vice President

Nikesh Arora - Chief Business Officer and Senior Vice President

Analysts

Spencer Wang - Crédit Suisse AG, Research Division

Mark S. Mahaney - Citigroup Inc, Research Division

Benjamin A. Schachter - Macquarie Research

Brian J. Pitz - UBS Investment Bank, Research Division

Douglas Anmuth - JP Morgan Chase & Co, Research Division

Carlos Kirjner - Sanford C. Bernstein & Co., LLC., Research Division

Heather Bellini - Goldman Sachs Group Inc., Research Division

A. Justin Post - BofA Merrill Lynch, Research Division

Lloyd Walmsley - Deutsche Bank AG, Research Division

Ross Sandler - RBC Capital Markets, LLC, Research Division

Anthony J. DiClemente - Barclays Capital, Research Division

Presentation

Operator

Good day, everyone, and welcome to the Google Inc. First Quarter 2012 Earnings Conference Call. Today's call is being recorded. At this time, I'd like to turn the conference over to your host, Director of Investor Relations, Ms. Jane Penner. Please go ahead, ma'am.

Jane Penner

Good afternoon, everyone, and welcome to today's first quarter 2012 earnings conference call. With us are Larry Page, Chief Executive Officer; David Drummond, Senior Vice President, Corporate Development, and Chief Legal Officer; Patrick Pichette, Senior Vice President and Chief Financial Officer; and Nikesh Arora, Senior Vice President and Chief Business Officer.

Also, as you know, we distribute our earnings release through our Investor Relations website located at investor.google.com. So please refer to our IR website for our earnings releases, as well as the supplementary slides that accompany the call.

This call is also being webcast from investor.google.com. A replay of the call will be available on our website in a few hours.

Now let me quickly cover the Safe Harbor. Some of the statements that we make today may be considered forward looking, including statements regarding Google's future investments, our long-term growth and innovation, the expected performance of our business and our expected level of capital expenditures. These statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please note that these forward-looking statements reflect our opinions only as of the date of this presentation, and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Please refer to our SEC filings for a more detailed description of the risk factors that may affect our results. Please note that certain financial measures that we use on this call, such as operating income and operating margin, are expressed on a non-GAAP basis and have been adjusted to exclude charges related to stock-based compensation. We have also adjusted our net cash provided by operating activities to remove capital expenditures, which we refer to as free cash flow. Our GAAP results and reconciliations of non-GAAP to GAAP measures can be found in our earnings press release.

With that, I will now turn the call over to Larry.

Larry Page

Thank you. Hi, everyone, and thanks for joining the call today. It's great to be here with all of you. I'll talk about our new class of stock at the end of my remarks, but first, I want to focus on our performance. We had a very strong quarter with revenue up 24% year-on-year at $10.6 billion. Since becoming CEO again last April, I've pushed hard to increase our velocity, improve our execution and focus on the big bets that will make a difference in the world. Google is a large company now, but we'll achieve more and do it faster if we approach life with the passion and the soul of a startup. This has involved a lot of cleanups. We've given many of our products including Search a visual refresh. They now have a more consistent look and feel. When we've closed or combined over 30 products, we have so many opportunities that without hard choices we end up spreading ourselves too thin and don't have the impact that we strive for.

Creating a simpler and more intuitive user experience across Google has been another important focus. I have always believed that technologies should do the hard work, but just takes scheduling and communications, so users can get on with what makes them happiest, life. Our products work seamlessly together so people don't have to navigate Google to get stuff done.

Chrome for Android, which launched this quarter, is a great example of this kind of simplicity we're shooting for. It does mean switching between devices painless. All of your tabs are there across your desktop and Android, you can even click the back button on a different device and it just works. Just try it out, it's a great experience.

It's the same with Google Play, which we also shipped this quarter. You can now access all your movies, your books and apps and games from the web or from your Android device, no cables, downloading or syncing required. We spent years working with partners to get all of this great content. So it's really exciting to see it brought together in a beautifully simply way that people can enjoy.

Now Google+ is truly at the heart of our efforts to create a simpler, more intuitive experience for all of our users. You should think of it in 2 parts. One is just our social spine. Once you're logged in and have upgraded to Google+, you're just using one Google, not a series of disconnected products. It's still early days, but with over 120 Google integrations to date -- Google+ integrations to date, we're on the right track. And your user experience on Google just gets better. You can see friends' recommendations when you're using Google Play and you don't think about that as Google+, but it just comes from that infrastructure. And we're seeing a positive impact all across the web. Google users can now recommend search results they like, a goal we’ve had ever since we started the company.

The other part is the social destination, which is accessed on your mobile client or on plus.google.com. This social destination part grew from a base of 0, not starting with all Google users like the part I was previously talking about, and is growing quickly. In fact, we see impressive engagement in fast growth here. It's just not all of Google. We are starting up a new community.

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