We’re live and listening….
A bunch of the execs are on. You can also follow along here….
Everything below is paraphrased.
Chief executive Larry Page: Good afternoon everyone. Google had a very strong quarter with revenue up 25% year over year…
Looking back, I’m most pleased with our growth and velocity
More than 200 updates in total. A bunch of new Hangout features. Engagement is also growing tremendously. Plus users are very engaged with our products, more than 60% daily, more than 80% weekly. Google+ is more than the individual features.
Take last week’s search announcement. You can now find everything that you’re looking for.
There are so many opportunities for Google today to make a real impact in the world. But we need to focus. We’ve closed 12 products to double down on Android, Chrome, Gmail, YouTube.
We’re seeing extraordinary velocity. 7,000 phones are lit up every day. 250 million Android devices in total, up 50 million from last time. Over 11 billion downloads from Android Market. Ice Cream Sandwich, new October build, is our best yet.
Chrome is on fire too. Intuitive, beautiful. “Who wants another browser.” A lot of people want to hit the web quickly and securely.
From the start, Gmail had security, access, etc. But now has 350 million active users and growing rapidly.
We have a ton of experience monetizing. Display, brought science of search to art of display. Annual run rate of 5 billion dolloars.
Ad exchange up 130% year over year, buyers and sellers doubling.
TruView ads on YouTube provide more choice, advertisers only pay when ad gets watched.
Enterprise has 5,000 new customers per day. Last week we signed our biggest deal, 110k users at BBA bank.
All of our businesses make money over the long term.
I always believe that you attract the best talent by building great work… part of a family… we topped Fortune’s workplace list.
Patrick: Like Larry, I’m very happy with our results. Revenues up, crowing great year of growth, investment. Financial results.
Gross revenue 25% to 10.6 billiondollars, 9% quarter over quarter growth. Currency rates had negative impact quarter over quarter. Last quarter’s exchange rate would have been 240 million higher. Google network revenue up 15%, 9% quarter over quarter. Negatively impacted by search quality improvements early last year.
Our other revenue to $410 million. Our global aggregate click growth was up… 17% quarter over quarter. Cost down 8% quarter over quarter.
It’s important to look at CPCs and clicks together. Again, something Susan will address.
….
Traffic acquisition costs were $2.5 billion or 25%. Others were 2.5 billion, excluding stock of 77 million….
Increase in opex primarily due to payroll. As a result, non-GAAP was $4 billion. 32% non-GAAP. Fund all growth.
Headcount up 1,100 for quarter, ended at 32,500.
In other income and expenses. Impairment charge for Clearwire — see web site.
$3.9 billion.
Capex investments are
Free cash flow was $3 billion dollars. With such a strong performance. Let me know hand it off to Nikesh.
Nikesh. Good growth over quarter, holidays. Strong performance. $10.6 billion in revenue. Sales team… driven impressive results. Outline performance by region. First in search, maintained robust growth. Beyond that, increasingly helping out advertisers. Help for branding. Driving in-store sales. Talks about mobile sales studies.
Display ads, great revenue growth Our investnments have really paid off. Now over $5 billion dollars run rate. Tremendous support from agency partners. Drive growth through innovation, ad exchange. Resulting in more efficiency, revenue for us and partners.
Sales display and search together, activating display ecosystem. Ford, GM, EA, L’Oreal, etc.
More and more marketing spend.
Mobile search continues to grow rapidly. 60% increase on mobile visitors in 2011. Develop mobile ecosystem. Kicked off Go Mobile campaign to build mobile sites.
Enterprise. Great traction. Both in large partners and many small businesses. We now have more than 5,000 customers to apps signing up every day. Costco was one of the largest retailers. Maryland, Utah, five top universities.
Country performance. Strong in Americas, but flat in many countries especially versus previous quarters. Cyber Monday was top day.
Key emerging countries saw rapid growth. Marketing and partnerships. You may have seen many of our initiatives… our sales teams have helped created over 1 million brand pages.
Get Your Business Online program. Got 100,000 businesses online in 20 countries alone. Our partnership team continues to drive great results. Mozilla renewed. Syndicated search revenues grew as we saw new impact. Excited to continue serving customers, partners, etc.
Susan: Search Plus Your World. Always about finding best results. Until now, limited to public world. Talks about CES searches, included search from friends and colleagues who were at show. In addition to seeing all the standard news for CES, I got to see all the personal. I searched Yosemite for summer plans. I saw mom’s article about not getting too close to waterfalls.
Ads. Strong this quarter. Important to look at clicks and CPCs. More clicks can lead to decreases in CPCS, etc. When we change, may be impacted differently. Site Links introduction caused increase in clicks but on lower CPC ads. Many of the ads quality changes. And, revenue positive. Good user and advertiser metrics.
Another important and key driver was foreign exchange. Mixed effects with mobile and emerging markets. New formats on 30% queries. Up 60% on listings. Expanded to more.
For small local businesses, we ramped up Adwords Express. Trialing in several other countries. By and sell display ads across many types of media. Audience buyers purchase via ad exchange. Also expanded to video and mobile. And on Google display network, growing. Quarter up over 60% from already large base. By understanding users’ interests, serve much more useful and relevant ads. TruView in-stream ads give option to skip. Advertisers incented to skip. Views 15% to 45%.
More than half are skippable. TruView ads across network.
Offers, which have been bringing online users to offline store. 30 cities. National offers. Partners. Wider variety. Memories for the future. Before and after street-view photograph. Drove thousands of miles.
Now back to Patrick.
Q&A session
Q from Brian: Mobile usage. Shift in holidays?
A from Nikesh: Mobile usage by leaps and bounds. Proliferation getting more active. Searches for generic, products, etc. Also saw uptick during season. Searching for ecommerce-related activities. Just to follow up.
Q from Brian: Significant decline is function of clicks going through mobile or other factors?
Q from Spencer Nguyen, CreditSuisse: UK international revenue slowed the most. Macro economy effect? For Susan, for $5 billion display run-rate? Lots of stuff between YouTube, mobile, ad network. Blended?
A from Patrick: Don’t provide tack rate on blended. GDN, YouTube, all of the additional elements of our display business. Also Admob. We don’t comment on details. On the economy, we had solid Q4 performance. Despite the effects issues. Despite environment, Europe was healthy. Secular shift. Quite pleased with performance internationally.
Q from Mark Maheny from Citi: Youtube. Within display bucket, quantify growth out of YouTube similar to overall display? TV ads migrating? Where are dollars coming from?
A from Patrick: YouTube doing absolutely terrific.
Larry: Tremendously excited about growth, success of YouTube. Not significant compared to overall advertising space. Don’t think advertisers are thinking about it as significant part of their other spend on video.
Q from Ben Schachter: Monetization beyond search, Android. What happens beyond search? Deceleration surprising. Going to Amazon, Expedia directly for travel.
A from Larry: Android is early. Strong on mobile ads. Also announced 11 billion downloads on Android market. Also having lot of people buy stuff too. Lot of potential. See us increase that a lot over time. Hard to give you details, but I’m very very optimistic.
A from Patrick: Such a strong Q4 2010, that its a really high level to start from. Core properties still very strong. All these reasons, way you’ve described.
Q from Heather Bellini from Goldman Sachs: CPC. What to expect?
A from Patrick: Quality. Full year will be represented. FX we don’t control ourselves. Has significant impact. Everything is mix of innovation, drives a ton of clicks, happens to have lower cost, CPC. That’s about our innovation agenda.
A from Susan: Bunch of small changes. Drew more attention. Increase in paid clicks. Guiding metrics are to understand that something is advertiser, user, revenue positive.
Q from Carlos Kirschner from Sanford Bernstein: Reconcile growth from search, display. Material portion from $5 billion.
A from Patrick: At highest level, site and network lines in our financials are not good proxies for search and display. YouTube is display, but ends up in Google Sites. Really easy to get confused between lines.
Q from Doug Aamonth from JP Morgan: Just wanted to go back to CPCs. We can obviously take effects out. Can you provide any more color there? Drive any meaningful shift?
A from Patrick: Not a dramatic number.
A from Susan: Changes in Q3. No single significant one that drove metrics. Combination. Rolled out over course of Q3. Saw impact in Q4. Cumulative effect. Sum of a bunch of other changes. Changes that may make ads more readable, visible, UI treatments, quality changes. We see those as positive. How do our users respond, how to our advertisers respond? Revenue positive.
A from Patrick: CPC, clicks, just happened that they all moved one way. Quality and ads team have… circumstantial.
Q from Gito Patel, Deutsch Bank: Doubling down on good products? Still innovating on new products? Not tied to ads? Can you talk about mobile distro costs? Scenario where costs are about where they are today? Development of mobile market?
A from Larry: Not stopping innovating. Continue to launch new products, new areas. Not ad supported. I’m very excited about that. May not launch 100 such things, just a few such things. I think we’ll be more concentrated in our efforts to create really amazing. Just concentrating.
Q from Some Guy: What is positive benefit of CPC growth? Hedge stuff.
A from Patrick: Our hedges, the costs we accelerated. Relative to entire portfolio. Think of as complete program that extends 16 months out, bond latter. All hedges mark to market. So much in the money. Have to actually accelerate. Today as we close our books, they signalled the weakness of the Euro relative to our portfolio. If things stayed exactly the same, we wouldn’t have costs in future quarters because we took them in one shot.
A from Larry: CPCs vary a fair amount. Lots of product changes we can make that increase or decrease CPCs. Constantly optimizing across a number of things. Numbers, ad placements, algorithms…. in any healthy economy, we’re going to see variation. I’m not surprised by that.
A from Susan: Increase in paid clicks is where the ads useful? Was it working? Increase in paid clicks shows it’s working. Sign that ad system is in demand, healthy.
Larry: question about something besides CPCs, please.
Q from Scott Devitt, Morgan Stanley: Paid clicks, CPCs. Third party data shows paid grows faster than clicks. Third quarter growth shows mixed shift in favor of paid. Search quality is driver? Advertisers would be paying more for better distribution. Same normalized for mobile etc. Question is: if you look at advertisers, are they paying more or less on unit distribution?
A from Patrick: third party data wrong, errors and methodologies. Record days. All of these things have hit records year after year. Again, offline to online. Susan’s last point is critical: moving, exploring formats that really work well. Symptom should be more clicking. Overall, better result? That’s actually healthy environment. As Susan said, happened that in Q3, number of them just went one way. That’s just the nature of experimentation.
Q from Jason Minaurd, Wells Fargo: Question on Google+. Social layer, social operation system. How can it improve engagement across all properties? Will other firms open up data streams from Twitter, Facebook.
A from Larry: I think we see, as I mentioned in my opening remarks, really. Google+ is a big effort. Other big companies that work on social data, seen tendency to wall off. Where we have been able to publicly able to access, we provide a lot in search. We love that, we would love to have more. We’d love to be able to use more.
Q from Jason: How many G+ users do we expect in a year or so?
A from Larry: Very excited about growth we’ve had. Seen tremendous number of people at it every day.
Q from Russ Sandler, Capital Market: Susan, on Google Offers, given Groupon, Living Social shows scale is advantage? In local, national. Any reason Google is in only 30 markets to date. Nikesh, Germany is a little weak. Which verticals?
A from Susan: Right now, 30 markets to date. That’s just to date. As there are more markets, makes more sense to roll out more. I do think that there is… important to understand what’s working. Perfecting that. So as we expand, expand with that knowledge, as it makes sense for us. Users, solution, we’ll build in learnings.
A from Nikesh: Generally auto strong around the world. Different are special in terms of US. Germany has been a market that has been doing really well. Part is running up against comps from last year. But weakness across the board.
A from Larry: Can look at Google Insights from more detail.
Q from Herman Leung from Susquehanna International Group: Pretty big change Q4 last year, how much of a headwind relative to Q4 of this year. Also, hiring rate. That’s a bit of a slowdown from previous quarters in the past.
A from Patrick: One-two punch. On the first one, mentioned because we thought it was material. We don’t comment on the specifics. Did create a little headwind. Remember in Q3 had everyone from school, had bump. Really pleased by results now that it’s good evidence to manage down numbers.
Q from Some Guy: Some Questions about Google Wallet. MMI deal… at very high level, talk about Motorola deal.
A from Susan: Larry said, focus on core products. All of us use wallet every day. Big opportunity for us. Invest in wallet business. Online and offline linked together. Better opportunities for ways our business is working. Continuing to invest.
A from Larry: Will break out Motorola separately. Very clear that it will remain with Android. When we announced the deal, manufacturers from different devices. Bid with other OEMs for any devices. Think we’ve done a great job managing partner ecosystem, even though difficult thing to do. Shows commitment to Android. Freedom to innovate.
A from Patrick: Even more specifically, you can expect segmented reporting to be clear to investors. And just a reminder, the headcount question reminded me. Important to remember that there are a lot of expenses. Think of resetting models. Every year we go through this. Employer taxes, everything… friendly reminder to take into consideration because everyone still gets surprised.