Q4 2009

Quarterly Earnings
Summary
 Fourth Quarter 2009 Highlights
• Revenue growth of 17% Y/Y and 12% Q/Q
– G
Google
l properties
ti revenue growth
th off 16% Y/Y and
d 12% Q/Q
– Network revenues increased 21% Y/Y and 13% Q/Q
– International revenues were $3.5 billion

• Operational Highlights
– Strong financial metrics: revenue growth, profitability, and cash flow
– Investing in technological innovation: 70/20/10
• Innovation in our more established business

– Search Display,
Search, Display Enterprise

• Innovation in our new businesses

– Mobile/Android

• Innovation in long-view investments

– Commerce and social

2
 Quarterly Revenues
Q4’09 Y/Y Growth = 17%
Q4’09 Q/Q Growth = 12%
$7,000
6,674
$6,500

$6,000 5,701 5,945

5,367 5,541 5,509 5,523
$5,500 5,186 2,044

$5,000
1,801
$ in millions)

1,693
$4,500 1,680 1,638 1,684
1,655
1,686
$4,000

$3 500
$3,500
($

$3,000

$2,500
4,421
$2,000 3,811 3,653 3,956
3,530 3 672
3,672 3 693
3,693
3,400
$1,500

$1,000

$500

$0
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09

3 Google.com Network Licensing and Other

 U S vs
U.S. vs. International Revenues
($ in millions)
5,186 5,367 5,541 5,701 5,509 5,523 5,945 6,674
100%

90%

80%

70% 51% 52% 51% 50% 52% 53% 53% 53%

60%

50%

40%

49% 48% 49% 50% 48% 47% 47% 47%

30%

20%

10%

0%
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09

US International
4
 Traffic Acquisition Costs
$1,800 40%
$1,700
$ ,
$1,600
$1,500 35%
$1,400
$1,300
29 2%
29.2%
$1,200 28.4% 30%
27.9%
$1,100 26.9% 26.9% 27.2% 27.1%
($ in millions)

26.6%
$1,000
$900 25%
1,721
$800 1 559
1,559
1,486 1,474 1,495 1,483 1,436 1,453
$700
$600 20%
$500
$
$400
$300 15%
$200
$100
$0 10%
Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Q2'09 Q3'09 Q4'09

TAC TAC as % of Advertising Revenues

5
 Costs and Expenses
GAAP
$Millions Q4'08 Q3'09 Q4'09
Cost of Revenues $2 190
$2,190 $2 226
$2,226 $2 408
$2,408
Percent of revenues 38% 37% 36%
Research & Development $733 $758 $736
Percent of revenues 13% 13% 11%
Sales & Marketing $506 $498 $583
Percent of revenues 9% 8% 9%
G
General
l & Administrative
Ad i i t ti $
$412 $
$389 $
$465
Percent of revenues 7% 7% 7%
Total Costs & Expenses $3,841 $3,871 $4,192
Percent of revenues 67% 65% 63%

Non-GAAP
$Millions Q4'08 Q3'09 Q4'09
Cost of Revenues $2,178 $2,211 $2,402
Percent of revenues 38% 37% 36%
Research & Development $551 $563 $557
Percent of revenues 10% 10% 8%
Sales & Marketing $450 $436 $531
Percent of revenues 8% 7% 8%
General & Administrative $376 $344 $426
Percent of revenues 6% 6% 7%
Total Costs & Expenses $3,555 $3,554 $3,916
Percent of revenues 62% 60% 59%

Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and
expenses to GAAP costs and expenses
6
 Profitability
GAAP
$Millions (except per share amounts) Q4'08 Q3'09 Q4'09
Income from Operations $ 1,860 $ 2,074 $ 2,481
Operating Margin 33% 35% 37%
Net Income $ 382 $ 1,639 $ 1,974
EPS (diluted) $ 1.21 $ 5.13 $ 6.13

Non-GAAP
$Milli
$Millions (except
( t per share
h amounts)
t ) Q4'08 Q3'09 Q4'09
Income from Operations $ 2,146 $ 2,391 $ 2,757
Operating Margin 38% 40% 41%
Net Income $ 1,616 $ 1,884 $ 2,188
EPS (diluted) $ 5.10 $ 5.89 $ 6.79

Note: Please refer to supporting

pp g Table 2 for reconciliations of non-GAAP results of operations
p
measures to the nearest comparable GAAP measures

7
 Free Cash Flow

$Millions Q4'08 Q3'09 Q4'09

Net cash provided by
operating activities $2,122 $2,726 $2,731

Less purchases of property

and equipment
q p ($368))
($ ($186))
($ ($221))
($

Free cash flow (Non-GAAP) $1,754 $2,540 $2,510

8
 Overview of Q4 2009 OI&E and FX

In Interest Income and Other, Net, we recognized net income of $88M for Q4

• In Q4, the interest income earned on our investments was $67M and we recognized $27M
in realized gains.

• As a result of foreign
g exchange
g rates movingg closer to the strike p
prices of our options
p in Q
Q4
relative to Q3, we expensed only $8M related to our FX cash flow hedging program vs. $67M
in Q3.

• Before hedging, the weaker USD relative to other currencies during the quarter had
a positive impact of $112M
$ on revenue compared to Q3 and a positive impact of $196M
$
compared to Q4’08.

• In addition to the positive impact on revenue quarter-over-quarter and year-over-year due

to more favorable FX rates
rates, our cash flow FX hedging programs allowed us to recognize a
benefit of approximately $8M to international revenue this quarter.

9
 Table 1 - Reconciliations of non-GAAP costs and expenses
to GAAP costs and expenses
As a % of As a % of As a % of
$Millions Q4'08 Revenues (1) Q3'09 Revenues (1) Q4'09 Revenues (1)
Cost of revenues (GAAP) $ 2,190
2 190 38% $ 2,226
2 226 37% $ 2,408
2 408 36%
Less: Stock-based compensation expense (12) (15) (6)
Cost of revenues (non-GAAP) $ 2,178 38% $ 2,211 37% $ 2,402 36%

Research and development (GAAP) $ 733 13% $ 758 13% $ 736 11%
Less: Stock-based compensation expense (182) (195) (179)
Research and development (non
(non-GAAP)
GAAP) $ 551 10% $ 563 10% $ 557 8%

Sales and marketing (GAAP) $ 506 9% $ 498 8% $ 583 9%

Less: Stock-based compensation expense (56) (62) (52)
Sales and marketing (non-GAAP) $ 450 8% $ 436 7% $ 531 8%

General and administrative (GAAP) $ 412 7% $ 389 7% $ 465 7%

Less: Stock-based compensation expense (36) (45) (39)
General and administrative (non-GAAP) $ 376 6% $ 344 6% $ 426 7%

Total costs and expenses (GAAP) $ 3,841 67% $ 3,871 65% $ 4,192 63%
Less: Stock-based compensation expense (286) (317) (276)
T t l costs
Total t andd expenses (non-GAAP)
( GAAP) $ 3 555
3,555 62% $ 3 554
3,554 60% $ 3 916
3,916 59%

(1) Percentages based on revenues of $5,701 million in Q4'08, $5,945 million in Q3'09 and $6,674 million in Q4'09.

10
 Table 2 - Reconciliations of non-GAAP results of operations
measures to the nearest comparable GAAP measures

Operating Operating Operating

$ millions except per share amounts Q4'08 Margin (1) Q3'09 Margin (1) Q4'09 Margin (1)
Income from operations (GAAP) $ 1,860 33% $ 2,074 35% $ 2,481 37%
Add: Stock
Stock-based
based compensation expense 286 317 276
Income from operations (non-GAAP) $ 2,146 38% $ 2,391 40% $ 2,757 41%

Net income (GAAP) $ 382 $ 1,639 $ 1,974

Add: Stock-based compensation expense (net of tax) 221 245 214
Add: Impairment of equity investments (net of tax) 1,013 - -
N t iincome ((non-GAAP)
Net GAAP) $ 1 616
1,616 $ 1 884
1,884 $ 2 188
2,188

Net income per share - diluted (GAAP) $ 1.21 $ 5.13 $ 6.13

Net income per share - diluted (non-GAAP) $ 5.10 $ 5.89 $ 6.79
Shares used in per share calculation - diluted 317 320 322

(1) Percentages based on revenues of $5,701 million in Q4'08, $5,945 million in Q3'09 and $6,674 million in Q4'09.

11
 Q4 2009
Quarterly Earnings
Summary