Google (GOOG)
Q2 2009 Earnings Call
July 16, 2009 4:30 pm ET
Executives
Maria Shim - Investor Relations
Patrick Pichette - Chief Financial Officer, Senior Vice President
Eric E. Schmidt Ph.D. - Chairman of the Board, Chief Executive Officer
Jonathan J. Rosenberg - Senior Vice President - Product Management
Nikesh Arora - President - Global Sales Operations and Business Development
Analysts
Imran Khan - J.P. Morgan
Mark Mahaney - Citigroup
Justin Post - BOA Merrill Lynch
Christa Quarles - Thomas Weisel Partners
Benjamin Schachter - Broadpoint Amtech
James Mitchell - Goldman Sachs
Sandeep Aggarwal - Collins Stewart
Youssef Squali - Jefferies & Company
Doug Anmuth - Barclays Capital
Spencer Wang - Credit Suisse
Jeffrey Lindsay - Sanford Bernstein
Jeetil Patel - Deutsche Bank
Heath Terry - FBR Capital
Steve Weinstein - Pacific Crest
Jim Friedland - Cowen & Company
Presentation
Operator
Good day and welcome, everyone, to the Google Inc. conference call. This call is being recorded. At this time, I would like to turn the conference over to Ms. Maria Shim. Please go ahead, Madam.
Maria Shim
Good afternoon, everyone and welcome to today’s second quarter 2009 earnings conference call. With us are Eric Schmidt, Chief Executive Officer; Patrick Pichette, Chief Financial Officer; Jonathan Rosenberg, Senior Vice President of Product Management; and joining us for the first time, Nikesh Arora, President of Global Sales Operations and Business Development. Eric, Patrick, and Jonathan will provide us with their thoughts on the quarter and then Nikesh will join us for Q&A.
This call is being webcast from our investor relations website located at investor.google.com. Please refer to our website for important information, including our earnings press release, issued a few minutes ago, along with slides that accompany today’s prepared remarks.
A replay of this call will also be available on our website in a few hours.
Please note that we routinely post important information on our investor relations website, located at investor.google.com, and we encourage you to make use of that resource.
As a reminder, we are holding two calls today. On this call we will discuss our strategic overview and Q&A with the usual format, followed by a second call which is effectively an extended Q&A session with Jonathan and Patrick, giving the opportunity for participants to ask more detailed financial and product questions in an efficient and reg FD compliant manner.
The second call will begin at 3:00 P.M. Pacific Time and will also be webcast from our investor relations website.
Now let me quickly cover the Safe Harbor -- some of the statements we make today may be considered forward-looking, including statements regarding investments in our core business and innovation, expected performance of our business, and our expected level of capital expenditures.
These statements involved 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 revision to these forward-looking statements in light of new information or future events.
Please refer to our SEC filings, including our annual report on Form 10-K for the year ended December 31, 2008, as well as our earnings press release for a more detailed discussion of the risk factors that may affect our results. Copies may be obtained from the SEC or by visiting the investor relations section of our website.
Also, please note that certain financial measures we use on the call, such as operating profit and operating margin, are expressed on a non-GAAP basis and have been adjusted to exclude charges relating 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 GAAP to non-GAAP reconciliation can be found in our earnings press release.
With that, I will now turn the call over to Patrick.
Patrick Pichette
Thank you, Maria. Good afternoon or good evening, everybody. What we will do is we will have our regular schedule, so Eric will give us his comments first. I’ll cover the financial portion and then Jonathan will give us a product update. As Maria mentioned, we also have Nikesh with us and then we will turn it to Q&A. So without further ado, I’ll let Eric introduce.
Eric E. Schmidt Ph.D.
Thank you very much, Patrick. So Google, we’ve had a good quarter, one that demonstrates our resilience in what continues to be a very difficult environment, 3% year over year growth, as you have seen from the press release.
Google as a business appears to have stabilized despite the still weak economic environment. Advertisers and customers are obviously seeing the benefit of the performance-based advertising that we offer and consumers are clearly using search more and ever to find the best deals.
We’ve also implemented careful cost controls to help our performance. Making our business more efficient has been our goal for the last few quarters and it should put us in a good position to benefit from the eventual recovery whenever that occurs. And we are going to continue to invest in innovation. History shows that companies which invest in innovation during downturns emerge stronger than the cost-cutting competitors and it’s easy for big companies, Google is now a large company, to become conservative to take small steps when they need to take really big ones, so we are determined not to make that mistake.
And as an example, you don’t change the world incrementally. You do it through big innovation and the ability to execute on your ideas. So for example, we just announced Chrome OS for netbooks, our effort to rethink what an operating system should be, based on our lightning fast browser technology, Chrome, which people are already using. We need a faster operating system for the same reason we need faster browsers -- people are now doing everything on the web and this will be an operating system built around ubiquity and the power of the Internet.
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