Q1 2011 Earnings Call
April 14, 2011 4:30 pm ET
Nikesh Arora - Chief Business Officer and Senior Vice President
Susan Wojcicki - Senior Vice President of ads
Jane Penner - IR & Corporate Communications
Jeffrey Huber - Senior Vice President of Engineering
Patrick Pichette - Chief Financial Officer, Principal Accounting Officer and Senior Vice President
Larry Page - Co-Founder and Chief Executive Officer
Scott Devitt - Morgan Stanley
Brian Pitz - UBS Investment Bank
Spencer Wang - Crédit Suisse AG
Jordan Rohan - Stifel, Nicolaus & Co., Inc.
Youssef Squali - Jefferies & Company, Inc.
Benjamin Schachter - Macquarie Research
Justin Post - BofA Merrill Lynch
James Mitchell - Goldman Sachs Group Inc.
Jason Maynard - Wells Fargo Securities, LLC
Heath Terry - Canaccord Genuity
Jason Helfstein - Oppenheimer & Co. Inc.
Jeetil Patel - Deutsche Bank AG
Mark Mahaney - Citigroup Inc
Ross Sandler - RBC Capital Markets, LLC
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Good afternoon, everyone, and welcome to today's First Quarter 2011 Earnings Conference Call. With us are Patrick Pichette, Senior Vice President and Chief Financial Officer; Susan Wojcicki, Senior Vice President, Advertising; Jeff Huber, Senior Vice President, Commerce and Local; Nikesh Arora, Senior Vice President and Chief Business Officer.
First, Patrick, Susan and Jeff will provide us with their thoughts on the quarter, after which Nikesh will join the group to answer your questions. Also, as you know, we now distribute our earnings release through our Investor Relations website located at investor.google.com. So please refer to our IR website for our earnings release, as well as 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 we make today may be considered forward looking, including statements regarding Google's future and investments in 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 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 which we use on this call, such as operating income and operating margin, are all also 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 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 Patrick.
Thank you, Jane. Good afternoon, everybody. We just happen to have a surprise visit. Larry is joining us for a few minutes at the beginning of the call and wanted to make a few comments. So before we start officially our call, I just want to welcome Larry. Welcome, Larry.
Thank you, Patrick. It's great to take just a few minutes with all of you. We've had a tremendous quarter, 27% year-over-year revenue growth in Q1. And we're really excited about that, and I think it shows the strength of our business and our continuing -- and the continuing growth really in the tech industry. And it's really still at the beginning from a user perspective. There's tremendous improvements to be had in our core products and our core business, and we're really excited about that.
I also wanted to mention a little bit about the management changes. Everything we told you last quarter has happened as we expected. It's all working very well, exactly as we planned. I'll just reiterate that quickly. I'm managing the day-to-day operations of Google as the CEO, working very closely with my team, and I'm really excited about the progress we've had there. I think we really hit the ground running. And Eric, of course, is focused externally, on the government partnerships, government relations and partnership outreaches. And last quarter alone, he was in Germany and Brazil, Argentina and Spain and has been just doing tremendous things for the company. Sergey, as we mentioned, is working very intensively on a few emerging projects for us. As I said, this was all exactly as we planned, and I'm very, very excited about those changes. I'd also mention we've made a number of changes to just simplify our organ, improve our velocity and execution and basically, simplify our reporting structures and such.
Now I'm very excited about Google and our momentum and very, very optimistic about our future. I also just wanted to mention we have Jonathan Rosenberg, who's usually done this call, is transitioning out of the company as was announced a while ago. And I really wanted to thank him for all of his insights and hard work and fine communication with all of you. And so we'll clearly miss him, and we really wanted to thank him from the bottom of our hearts.
So those are the main things I wanted to say. I'm tremendously excited about all of the things that lay before us as a company. And I also want to say you're in very good hands with the team here, and Patrick who now should take the call away.
Great. Thank you, Larry. Thank you for taking a few minutes in the schedule to just drop in. So what we'll do now is we are back. So we found a phone for the last 30 seconds, and we're going to be back now with the rest of the team to go back to our regular call.
So as an overview, I'll be giving you the regular speech. Susan and Jeff will give you color comments as well in the product area, as well as the monetization side. And Nikesh is with us so that when we go through Q&A, he'll be answer to give you a lot more color commentary in some areas.
Look, we're nothing but very, very excited about our reporting 27% year-over-year revenue growth in Q1. This 27% proves really the logic behind our strategy, not only to invest heavily in our core Search business and Ads but also in our new emerging businesses like Display, like Mobile, like Enterprise. From an investment perspective, our Q1 results don't only show our continued commitment to invest in hiring, in marketing and in the other areas, but they also -- as you can see through our expenses, they reflect, for the first time, the full impact of the compensation changes we announced in Q4, the 10% salary increase. Google is clearly benefiting from and is also fueling the unrelenting pace of the digital economy that's around us. And it's growth that we believe will benefit both Google but in fact, the entire ecosystem for a long time to come.