My Doc by Robin Zieme

Q1 2009 Quarterly Earnings Summary

First Quarter 2009 Highlights

• Revenue growth of 6% Y/Y and -3% Q/Q –

Google properties revenue growth of 9% Y/Y and -3% Q/Q

–

Network revenues decreased 3% Y/Y and Q/Q

–

International revenue was $2 $2.9 9 billion

• Operational Highlights –

Traffic and revenue solid in Q1 despite difficult economic environment

–

Key investments continue in our core search and ads businesses

–

Continuing to invest in strategic growth areas:

• Display, Apps, and Mobile

• Maintaining a clear focus on operational efficiency and continued cost management 2

Quarterly Revenue $6,000 $5,500

5,701

Q1’09 Y/Y Growth = 6% Q1’09 Q/Q Growth = -3%

5,541 5,186

$5,000

5,509

5,367

4,827 1,693 1,680

$4,500

4,231 3,872

$4,000

1,636

$ in millions

3,664 $3,500

1,686

1,638

1,655

1,455

3,205 1,352

$3,000

2 456 2,456 $2,500

1,345

2,690 1,198

2,254 1,037

$2,000

997 928

3,400

3,530

3,672

3,811

3,693

3,122

$1,500 2 486 2,486

2 735 2,735

2,282

$1,000

1,977 1,297

1,432

1,626

$500 $0 Q1'06 Q2'06 Q3'06 Q4'06 Q1'07 Q2'07 Q3'07 Q4'07 Q1'08 Q2'08 Q3'08 Q4'08 Q1'09 Google.com 3

Network

Licensing and Other

U S vs U.S. vs. International Revenue $6,000

5,701 5,367 ,

$5 500 $5,500

5,541

5,509

5,186 4,827

$5,000 $4,500

50%

52%

50%

48%

51%

4,231 52%

$ in n millions

$4 000 $4,000

3,664

$3,500

$1,000

48% 48%

2,690

47%

2,456 2,254

44% 44%

$2,000 $1,500

51% 48%

3,205

$3,000 $2,500

3 872 3,872

52%

42% 42%

53%

52% 52%

49% 49%

48%

56% 58%

58%

56%

$500 $0 Q1'06 Q1 06 Q2 Q2'06 06 Q3 Q3'06 06 Q4 Q4'06 06 Q1 Q1'07 07 Q2 Q2'07 07 Q3 Q3'07 07 Q4 Q4'07 07 Q1 Q1'08 08 Q2 Q2'08 08 Q3 Q3'08 08 Q4 Q4'08 08 Q1 Q1'09 09

US 4

International

Traffic Acquisition Costs $1,500

40%

$1,400 $ , $1,300 $1,200

35%

32.5% 32.3% 31.0% 30.7% 31.0%

$1,100

29.9%

$ in n millions

$1,000

30.3% 29.2%

29.1%

30%

28.4% 27.9% 27 9% 26.9% 26.9%

$900 $800

1,495 1,483 1,440 1,486 1,474 1,436

$700 $600

1 148 1,125 1,148

$500

1,221

20%

976

$400

825

785

723

25%

$300

15%

$200 $100

TAC 5

TAC as % of Advertising Revenues

09 Q 1'

08 Q 4'

08 Q 3'

08 Q 2'

08 Q 1'

07 Q 4'

07 Q 3'

07 Q 2'

07 Q 1'

06 Q 4'

06 Q 3'

Q 2'

Q 1'

10% 06

Costs and Expenses GAAP $Millions Cost of Revenues Percent of revenues

Research & Development

Q1'08

Q4'08

Q1'09

$2 111 $2,111

$2 190 $2,190

$2 101 $2,101

41%

38%

$673

$733

$642

Percent of revenues

13%

12%

Sales & Marketing

$447

$506

$434

$ $409

$ $412

$ $448

$3,640

$3,841

$3,625

70%

67%

66%

Percent of revenues

G General l & Administrative Ad i i t ti Percent of revenues

Total Costs & Expenses Percent of revenues

Non-GAAP $Millions Cost of Revenues Percent of revenues

Research & Development Percent of revenues

Sales & Marketing Percent of revenues

General & Administrative Percent of revenues

Total Costs & Expenses Percent of revenues

Q1'08

Q4'08

Q1'09

$2,102

$2,178

$2,089

41%

38%

$479

$551

$473

10%

$404

$450

$375

$374

$376

$411

$3,359

$3,555

$3,348

65%

62%

61%

Note: Please refer to supporting Table 1 for reconciliations of non-GAAP costs and expenses to GAAP costs and expenses 6

Profitability GAAP $Millions Income from Operations Operating Margin Net Income EPS (diluted) Non-GAAP $Milli $Millions Income from Operations Operating Margin

Q1'08

Q4'08

$1,546 $ 30%

1,860

Q1'09 $

33%

1,884 34%

$1,307 $

382

1,423

$4.12 $

1.21

4.49

Q1'08

Q4'08

$1,827 $ 35%

2,146

Q1'09 $

38%

Net Income

$1,537 $

EPS (diluted)

$4.84

2,161 39%

1,616

1,636

5.10

5.16

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

Free Cash Flow

$Millions Net cash provided by operating activities

Q1'08

Q4'08

Q1'09

$1,780

$2,122

$2,250

Less purchases of property and equipment q p

($842)) ($

($368)) ($

($263)) ($

Free cash flow (Non-GAAP)

$938

$1,754

$1,987

Table 1 - Reconciliations of non-GAAP costs and expenses to GAAP costs and expenses $Millions Cost of Revenues (GAAP) Less: Stock-based compensation Cost of Revenues (non-GAAP)

Q1'08 $ $

Research and development (GAAP) Less: Stock-based compensation Research and development (non (non-GAAP) GAAP)

Sales and marketing (GAAP) Less: Stock-based compensation Sales and marketing (non-GAAP)

General and administrative (GAAP) Less: Stock-based compensation General and administrative (non-GAAP) Total costs and expenses (GAAP) Less: Stock-based compensation T t l costs Total t and d expenses (non-GAAP) ( GAAP)

$ $

As a % of Revenues (1)

2,111 2 111 (9) 2,102

41% $

673 (194) 479

13% $

447 (43) 404

9% $

41% $

9% $

8% $

409 (35) 374

7% $

3,640 (281)

3 359 3,359

As a % of Revenues (1)

Q4'08 2,190 2 190 (12) 2,178

38% $

733 (182) 551

13% $

506 (56) 450

38% $

10% $

2,101 2 101 (12) 2,089

38%

642 (169) 473

12%

434 (59) 375

448 (37) 411

9% $ 8% $

38%

412 (36) 376

7% $

70% $

3,841 (286)

67% $

3,625 (277)

66%

65% $

3 555 3,555

62% $

3 348 3,348

61%

7% $

6% $

(1) Percentages based on GAAP revenues of $5,186 million in Q1'08, $5,701 million in Q4'08 and $5,509 million in Q1 '09.

As a % of Revenues (1)

Q1'09

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

Figures in millions except per share amounts

Q1'08

Operating Margin (1)

Q4'08

Operating Margin (1)

Q1'09

Operating Margin (1)

Income from operations (GAAP) Add: Stock-based Stock based compensation

1,546 281

30% $

1,860 286

33% $

1,884 277

34%

Income from operations (non-GAAP)

1,827

35% $

2,146

38% $

2,161

39%

Net income (GAAP) Add: Stock-based compensation (net of tax) Add: Impairment charges related to certain equity investments (net of tax)

1,307 230 -

382 221 1,013

1,423 213 -

N t iincome (non-GAAP) Net ( GAAP)

1 537 1,537

1 616 1,616

1 636 1,636

Net income per share - diluted (GAAP)

$4.12

1.21

4.49

Net income per share - diluted (non-GAAP) Shares used in per share calculation - diluted

$4.84 317

5.10 317

5.16 317

(1) Percentages based on GAAP revenues of $5,186 million in Q1'08, $5,701 million in Q4 '08 and $5,509 million in Q1 '09.

Q1 2009 Quarterly Earnings Summary