Google Inc. (GOOG)
Q3 2009 Earnings Call Transcript
October 15, 2009 4:30 p.m. ET

Executives

Maria Shim - Investor Relations
Eric E. Schmidt - Chairman and Chief Executive Officer
Patrick Pichette - Senior Vice President and Chief Financial Officer
Nikesh Arora - President, Global Sales Operations and Business Development
Jonathan J. Rosenberg - Senior Vice President, Product Management

Analysts

Mark May - Needham & Company
Imran Khan - J.P. Morgan
Brian Pitz - UBS
Jeffrey Lindsay - Sanford C. Bernstein
James Mitchell - Goldman Sachs & Co.
Christa Sober Quarles - Thomas Weisel Partners
Ross Sandler - RBC Capital Markets
Sandeep Aggarwal - Collins Stewart
Justin Post - Banc of America/Merrill Lynch
Mark Mahaney - Citigroup
Benjamin Schachter - Broadpoint.AmTech
Jason Helfstein - Oppenheimer & Co.
Douglas Anmuth - Barclays Capital
Jeetil Patel - Deutsche Bank
Spencer Wang - Credit Suisse
James Friedland - Cowen and Company
George Askew - Stifel Nicolaus & Company, Inc.

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 call over to Ms. Maria Shim, Director of Investor Relations. Please go ahead, ma''am.

Maria Shim

Good afternoon, everyone. And welcome to today''s third quarter 2009 conference call. With us are Eric Schmidt, Chief Executive Officer; Patrick Pichette, Chief Financial Officer; Jonathan Rosenberg, Senior Vice President of Product Management; and Nikesh Arora, President, Global Sales Operations and Business Development.

Today, we are trying a new process on our earnings call. Eric, Patrick, Jonathan and Nikesh will each provide us with thoughts on the quarter and then we will take Q&A from Google moderator. This is our first time using Google moderator to respond to questions from the investment community, so let me briefly explain the process.

Please submit your questions via the moderator page that we have sent out and the audience will vote on the most relevant questions. We will only be taking questions that are relevant to today''s earnings results and Google''s long-term strategy. I will read the question and the name of the person who submitted the question and then have Eric, Patrick, Jonathan or Nikesh answer.

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''re 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 long-term growth and innovation, 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 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 description of the risk factors that may affect our results. Copies can 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 this call, such as operating profit and operating margin, are expressed in 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 Eric.

Eric E. Schmidt

Thank you. Thank you very much, Maria. Good afternoon to all of you and welcome to our third quarter earnings call. Let''s start by summarizing where we are, while there''s obviously a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and we''re seeing lots of signs of that in all of the industries that we pay attention to. So we''re very optimistic now about the future and we now have the business confidence to invest heavily in the next phase of innovation, helping to invent the future as we see it.