Google

Google
ANALYSIS for NASDAQ : GOOG FEBRUARY 16, 2012
GOOGLE PC SEARCH ADS
627
607
Market Price
Google's Revenue per Search on PCs 6 Google's PC Search Market Share 7 Global PCs in Use 8 Internet Searches Per PC in Use 9 Google's PC Search EBITDA Profit Margin 10
GOOGLE MOBILE SEARCH ADS
$203 B MKT CAP

Trefis Estimate
$197.2 B MKT CAP
See the Full Analysis for Google on Trefis

CORPORATE SNAPSHOT
Google.com and Google's international sites (e.g. Google.ru, Google.com.br, and others) offer a dedicated platform to conduct searches on the Internet through PCs and wireless devices. Google makes money from contextual advertising known as keyword advertising that is shown based on the type of search a user conducts. For example, a user searching for "NYC restaurants" would be shown a variety of ads on the right-hand side of Google's search results pertaining to restaurants and food services in New York City. Advertisers on Google bid for keywords (such as "NYC restaurants ") to display their advertisements on the Google search page. Google AdWords allows these advertisers to display advertisements in Google's search results and the Google Content Network through either a cost-per-click or costper-view scheme. The pricing of keywords, the inventory of keywords available, and the frequency of user search, impact how much money Google makes on search. In addition to advertising on its search engine, Google makes money by placing advertisements on other Google-owned properties such as video sharing site YouTube, social networking site Orkut, email service Google Mail (Gmail), etc. Google also makes money by facilitating the placement of advertising on its "partner" websites (via ad serving application AdSense) from which it receives a share of the advertising revenue. Google search on mobile is increasingly gaining importance as more and more users are shifting towards mobile devices like smartphones and tablets for web browsing. According to our estimates derived from publicly available sources, tablets and smartphones are expected to surpass PC's in use globally by around 2015. As a result, mobile search would increasingly gain importance for Google, rivaling its PC-based search in contributing towards Google's stock.
VALUATION HIGHLIGHTS
Google's Revenue per Search on Mobile Devices 12 Global Smartphones in Use 13 Global Tablets in Use 15 Internet Searches Per Mobile Device 16 Google Mobile Search EBITDA Profit Margin 17
AD PARTNERSHIPS FOR SEARCH & CONTENT
Google Share of Partner Content Revenues 18 Google Content Partner Page Views 19 Partner Ads EBITDA Profit Margin 20
YOUTUBE
Revenue per Page View 21 Number of YouTube Users 22 Page Views per User 23 YouTube EBITDA Profit Margin 24
GMAIL & ORKUT
Gmail Revenue per Page View 25 Number of Gmail Users 26 Gmail & Orkut EBITDA Profit Margin 26
GOOGLE PHONE
Google Phone Pricing 28 Google Share of Global Mobile Phone Market 29 Global Mobile Phone Units 30 Google Phone EBITDA Margin 31
GOOGLE APPS
1. Google PC Search Ads constitute 33% of the Trefis price estimate for Google's stock. 2. Google Mobile Search Ads constitute 32% of the Trefis price estimate for Google's stock. 3. Ad Partnerships for Search & Content constitutes 7% of the Trefis price estimate for Google's stock.
Price per Paying Google Apps User 32 Number of Google Apps Users 33 Percent of Paying Google Apps Users 35 Google Apps EBITDA Margin 36
SEARCH APPLIANCES Revenue per Customer 37
Search Appliance Customers 37
Search Appliance EBITDA Profit Margin 38

BLOGGER & OTHER SITES Revenue per Page View 40 Page Views 40
Other Sites EBITDA Profit Margin 41

APPENDICES
See the Interactive Valuation Breakdown on Trefis Our share price estimate and the overall company value is derived by summing-up the values of individual divisions/businesses in a sum-of-theparts analysis. The value of each division is calculated using a discounted cash flow (DCF) methodology. We forecast fundamental drivers like pricing, market share, and profit margins for different businesses in estimating the divisions value within the DCF framework. The analysis below primarily focuses on those important forecasts that drive our share price and value estimate. Our complete analysis, including sources of historical data, underlying equations and additional discussion are available on www.trefis.com.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
Summary P&L for Google 44 Detailed Google PC Search Ads P&L 46 Detailed Google Mobile Search Ads P&L 47 Detailed Ad Partnerships for Search & Content P&L 48 Detailed YouTube P&L 49 Detailed Gmail & Orkut P&L 50 Detailed Google Phone P&L 51 Detailed Google Apps P&L 52 Detailed Search Appliances P&L 53 Detailed Blogger & Other Sites P&L 54
Below are key drivers of Google's value that present opportunities for upside or downside to the current Trefis price estimate for Google: Google Search Ads Google Search Market Share: Google's global PC search market share has stayed at dominant levels at around 65% in 2007 to around 66% in 2011, mainly at the expense of Yahoo. At the same time, Google has remained virtually monopolistic in the mobile search market, with an estimated market share of 97%. However, Microsoft has started to take aggressive measures to take share from Google. It first partnered with Yahoo and then with Facebook to expand Bing market share. Google also faces a potential threat from Apple's Siri, which has enjoyed immense favor with users of iPhone 4S. There could be a downside of 10% to the Trefis price estimate if Google's PC market share declines to levels of 57%-58% and its mobile search market share declines to around 80%. On the other hand, if Google continues to bring innovation like Google Instant, it could continue to gain market share. There could be an upside of 10% to the Trefis price estimate if its PC and mobile market shares increase to 90% and 100% by the end of Trefis forecast period. Google Search EBITDA Margin: We currently forecast Google Search
TREFIS ANALYSIS for GOOGLE
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margin to increase from about 43% in 2011 to about 45% by the end of the Trefis forecast period. Google's main operating cost component is the Traffic Acquisition cost (TAC) which has gone down for the past few years as partners have increasingly found Google's AdSense as a preferred means. If Google can further control this cost component, its margins can go up at a fast pace. There could be an upside of 10% to the Trefis price estimate if its margins go up to 50%-51% by the end of Trefis forecast period. For additional details, select a driver above or select a division from the interactive Trefis split for Google at the top of the page.
SOURCES OF VALUE
We believe Google Search Ads is much more valuable than Ad Partnerships for Search & Content, YouTube, Gmail, Orkut and other divisions due to the following reasons: Google Dominates Web Search on a Global Scale Google's flagship search business continues to dominate globally. Competitors like Yahoo, Microsoft and AOL have been consistently pushed back as Google retains market shares of around 66% and 97% in PC and mobile devices respectively. The company's superior algorithms and brand recognition have clearly found favor with users, and till date the search engine market has not boasted of a better search tool. Given the current trends, Google's dominance is expected to continue, although one cannot discount future technologies such as Apple's Siri as possible future threats. Growing Internet Searches per PC in Use As web penetration increases across emerging markets like India, users are expected to increasingly become more familiar and comfortable with using web search as the flagship tool to look for information. In addition to this, web browser development has increasingly made it easier to promptly do a web search. For example, the Google Chrome obviates the need to actually open the Google homepage to do a search. These above factors should contribute significantly in growing web searches for every PC device globally. Smartphone and Tablet Usage on the Rise The mobile revolution would have a big role to play in the way Google search is utilized. Smartphone and tablet capabilities are improving by leaps and bounds. This includes personal usage like finding restaurants and utilizing maps and GPS (Global Positioning System), as well as professional uses such as sending/receiving e-mails and making presentations. As bandwidths increase in emerging markets, mobile device functionality is expected to come at par with PC's in the next 4-5 years. This should lead to a substantial increase in the number of mobile devices in use globally. High Search Monetization on Mobile We estimate Google's revenue per 1,000 searches (RPS) on mobile devices to
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be around $7 in 2011 and expected to reach close to $10 going forward. Advertisers are increasingly recognizing that users spend a lot of time on their smartphones/tablets, with activities including music, watching videos and social networking. As a result, monetization of search on mobile devices should increase, closing in on RPS levels for PC-searches.
KEY TRENDS
Growing Mobile Search We expect increasing adoption of Internet search capable mobile phones, higher mobile Internet speeds, and increasing partnerships between search engines and mobile phone manufacturers (for e.g. think Google search on iPhone). According to a report by RBC Capital Markets, global mobile searches are expected to grow to upto 20% of total searches in 2012. Google's open source mobile OS, the Android, should greatly benefit from this, as it uses Google search as the default search option. The Android also has the advantage of being used by multiple manufacturers, including Samsung and HTC. Increasing Video Advertising In contrast to search, which is more functional and commercial in nature, online video and social networking are more entertainment-focused, where ads are generally seen as a distraction. Currently, ads displayed on such platforms are graphical and static in nature, which do not drive the same recall as a moving video (e.g. television ads). As YouTube and other video sharing sites figure out better ways of displaying ads which are not intrusive and do not interfere much with the user experience (like Revision3's in-video interactive clickable ads), advertisers will be willing to pay more for such ads, driving up overall video advertising monetization. Patent Lawsuits Threaten Android Lately, Google and its Android-OEM partners like Samsung have been plagued by patent infringement lawsuits from arch rivals like Apple and Microsoft. In some regions like Germany, Apple has successfully ensured that certain Android-powered devices are banned from imports. On the other end, Microsoft has made sure that it extracts a licensing fee from every Samsung Galaxy S-II smartphone that is sold. Given the cut-throat competition that prevails in the smartphone and tablet sector, patent wars are expected to rage on in the coming years as well, threatening Android's market share in the mobile OS market. For now, Google has tried to build its own patent moat by acquiring Motorola Mobility in August 2011, raising its patent portfolio from less than 1,000 to over 17,000. Voice-enabled search can threaten traditional search Apple's voice-enabled search tool Siri has found a lot of favor with users, as it provides an even simpler and hands-free approach towards web search. While still not a credible threat, Siri could be paving the way for voice-enabled search becoming the norm, and Google might need to follow suit with its
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own version. NOTE: Google announced its $12.5 billion acquisition of Motorola Mobility on 15th August 2011. While the acquisition is still pending, we would be updating our analysis for Google once the transfer of ownership is complete. This update would include placing Motorola Mobility as a separate operating division within Google. See the Full Analysis for Google on Trefis
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Google PC Search Ads

The Google PC Search Ads division constitutes 33.4% of our $627 price estimate for this stock, based on our sum of the parts analysis.The most important drivers for the Google PC Search Ads business are: Google's Revenue per Search on PCs Google's PC Search Market Share Global PCs in Use Internet Searches Per PC in Use Google's PC Search EBITDA Profit Margin
GOOGLE'S REVENUE PER SEARCH ON PCS
Google's Revenue Per Search (RPS) represents the average advertising revenue generated by Google for every 1,000 searches conducted on Google.com and other websites on PC devices (non-mobile). Revenue per search is primarily a function of the click through rate (CTR) on ads placed alongside search results, as well as the price paid by advertisers for every user click (CPC).
Google's Revenue per Search on PCs ($ per 1,000)
20 15 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Monetization for search ads on Google has generally been high, staying around $22-$23 for 2007-08. However, recession adversely affected advertisers' propensity to pay for ads, reducing this number to around $17 for 2009-2010. We expect RPS to show a gradual decline for Google's PC search division. Forecast Rationale Supporting: 1. RISING SEARCH VOLUMES IN LOWER AVERAGE RPS SEARCH VERTICALS The search volume on Google is shifting away from high RPS search verticals--such as technology, finance, and retail--towards verticals such as entertainment, local, and consumer products, where monetization is appreciably lower. Lower monetization in certain verticals is attributable to lower pricing of search keywords (also known as Cost per Click) in those verticals.
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2. INCREASING INTERNATIONAL MIX RPS in the US has always been more than the RPS in international markets. We would expect the international mix of total searches to increase going forward, which should be a drag on overall RPS. Mitigating: 3. OPTIMIZATION OF E-COMMERCE WEBSITES DRIVING UP CONVERSION RATES The optimization of e-commerce sites will improve conversion rates and enable merchants to bid more for each click. In particular, online retailers are making significant improvements to improve their search facilities, ramping up their fraud detection technology, and adopting standardized money-back policies--all of which should help drive conversion rates up. 4. CAN GOOGLE INSTANT BRING MEANINGFUL INCREASES IN REVENUE PER SEARCH? Google Instant could help people search using terms that connect them more directly with the information they need. Advertisers will also benefit from higher conversion rates, making the average search term more valuable. However, Google Instant could probably bring down the click through rates, because each ad may be displayed several times as the user types letters into the search box, and users are unlikely to click on ads until they have completed their queries. 5. KEYWORD PRICE INFLATION A larger advertiser base and more automated bidding could increase the number of keywords that advertisers bid on. 6. GOOGLE CAN IMPROVE USER ENGAGEMENT Google could track the users Google Search history to understand their interests and preferences. It could also leverage Gmails growing popularity and the potential that Google TV possesses. If Google can successfully tap the users information on these different platforms, it could certainly bring about better targeted ads. Targeted ads helps increase the click through rates of the ads, which help the advertiser in realizing higher conversion rates. Googles RPS could benefit from that. Sources for historical data and explanations can be found on the Trefis.com website (link)
GOOGLE'S PC SEARCH MARKET SHARE
Google's PC Search Market Share represents the percentage of worldwide Internet searches that are conducted on Google excluding those on mobile. Google's primary competitors are Yahoo! Search, Microsoft's Bing and AOL.
Google's PC Search Market Share (%)
70 60 50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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Google continues to retain a dominant position in the PC search market. The company's PC search share was 65% in 2007, which has risen to around 66% in 2010. We expect this market share to rise going forward. Forecast Rationale Supporting: 1. GOOGLE INSTANT COULD BRING MEANINGFUL INCREASES TO ITS MARKET SHARE Google Instant benefits the user by shaving off an estimated two to five seconds of the users's time required for a typical search. This innovation could mean that more users could come to Google's search engine to conduct searches. 2. GOOGLE BRAND RECOGNITION Google remains the most visited brand on the web. According to Nielsen Wire, Google retained this spot with over 170 million unique visitors for the month of September 2011. 3. WIDENING PRESENCE OF GOOGLE Google reinforces its presence with users through the placement of its search toolbar in the ever-popular Firefox browser and in the Apple iPhone. Innovative and frequently-used Google offerings, such as Google Maps, Google Earth, and Google Apps continue to increase Google mindshare amongst consumers. Google's search partnerships with third-party websites also gives Google additional web presence 4. SUPERIOR SEARCH ALGORITHMS Google has long been known for its superior search algorithm, which has played a big role in dwindling market shares of competitors like Bing and Yahoo. The company also frequently updates its algorithms, consistently providing better a search experience to users. Changes to the algorithm were made as recently as November 2011. Sources for historical data and explanations can be found on the Trefis.com website (link)
GLOBAL PCS IN USE
Global PCs in Use refers to the total number of PC's in use globally for a given year. This includes desktops, laptops and other devices excluding mobile phones, smartphones and tablets.
Global PCs in Use (Bil)
1.75 1.50 1.25 1.00 0.75 0.50 0.25 0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Global PCs in Use stood at 1 billion for the year 2008. Since then the number has steadily risen to around 1.3 billion PC devices by 2010. The increase has come about as overall penetration has increased in developing nations like China and
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India, where governments themselves are providing an impetus to promote technology in suburban and rural areas. We expect global PC's in use to increase, albeit at a diminishing rate. However, we expect that in 4-5 years this growth will stop as mobile devices increasingly provide comparable or even more functionality. Forecast Rationale Supporting: 1. CONTINUED EXPANSION OF THE BROADBAND PENETRATION RATE The increasing availability of reasonably-priced residential broadband services will make it more attractive for residences currently without Internet access to sign up. Lower cost access to the Internet provided by companies such as AT&T and Verizon should increase access. 2. LOW COST LAPTOPS ARE CATCHING UP The ARM-enabled Windows 8 operating system can provide a viable alternative to Intel-powered devices. ARM-based laptops are expected to account for around 23% of global laptop shipments by 2015. These ARM-based laptops would be cheaper, lying in the sub-$700 range. This price advantage can act as an incentive for potential users in developing nations to purchase these laptops. Mitigating: 3. MOBILE DEVICES COULD REPLACE PC'S Mobile device advancement in the past few years has shown that mobile devices are increasingly becoming capable of performing the same tasks as PC devices, along with the added advantage of being highly portable. These tasks include web browsing, e-mailing, media & entertainment. Consequently, mobile devices are increasingly approaching the same functionality that PC devices can provide. Sources for historical data and explanations can be found on the Trefis.com website (link)
INTERNET SEARCHES PER PC IN USE
Internet Searches Per PC in Use represents the average number of Internet searches conducted on a PC per month.
Internet Searches Per PC in Use (per Month)
100 75 50 25 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
As awareness and penetration for the web continues to grow, the average searches per user per month have consistently risen, growing from around 72 to around a 100 from 2007 to 2010. We expect this figure to continue to increase in the
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future as well. Forecast Rationale Supporting: 1. INCREASED FAMILIARITY WITH SEARCH AS A TOOL FOR FINDING PRODUCTS, SERVICES, AND INFORMATION As web penetration increases across emerging nations, users are expected to increasingly become more familiar and comfortable with using web search as the flagship tool to look for information. 2. SMARTER WEB BROWSERS Web browser development has increasingly made it easier to promptly do a web search. For example, the Google Chrome obviates the need to actually open the Google homepage to do a search. The user can instead directly enter the search item in the URL space. Search capabilities are also increasingly being integrated into other tools like maps, videos, audio and local shopping. 3. BY DEFAULT, SEARCH DATABASE WOULD ONLY GROW MORE The nature of the web itself means that information is increasingly being added on to the internet. This would progressively add to the search database going forward. Sources for historical data and explanations can be found on the Trefis.com website (link)
GOOGLE'S PC SEARCH EBITDA PROFIT MARGIN
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) are profits after factoring in typical expenses, such as Cost of Goods and Services Sold, SG&A Expenses, and R&D Expenses. EBITDA Margin represents divisional EBITDA as a percentage of divisional revenues. We adjust EBITDA figures to exclude non-recurring charges and noncash charges, such as stock-based compensation expenses.
Google's PC Search EBITDA Profit Margin (%)
50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Google's PC Search EBITDA Profit Margin has stayed around 47%-49% for the 2007-2010 period. 2011 margins have seen a significant drop, primarily as Google incurred higher SG&A costs on salary hikes and increased hiring. We expect EBITDA margins to show a slight increase going forward.
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Forecast Rationale Supporting: 1. SG&A COSTS TO BE MORE CONTROLLED Current (2011) levels of SG&A costs for Google have been higher than normal, as the company is extensively focusing on its manpower, giving salary hikes as well as hiring around 6000 employees by the end of 2011. We expect this high SG&A cost to reduce as a percentage of revenue in the long run, easing the EBITDA margins. Mitigating: 2. TRAFFIC ACQUISITION COSTS MAY RISE DUE TO RISING COMPETITION Search revenue made by Google from third parties involves the company paying its partners a share of the revenues, known as a traffic acquisition cost (TAC). Competition is steadily rising in the online advertising space, with other large tech companies like Amazon also pushing their respective ad businesses to improve margins. This may raise TAC for Google, putting downward pressure on margins. 3. PRODUCT DELAYS TO PUSH UP OPERATING EXPENSES Google TV service did not meet expectations and received weak reviews from users, prompting Google to refine its software and causing delays in integrated product introductions with popular TV makers. Google has also announced delays for a few other projects like the Chrome OS for netbooks and Androids version for tablets. Chrome OS will now be launched in mid-2011, after initial expectations for launch during the second half of 2010. Sources for historical data and explanations can be found on the Trefis.com website (link) Total Revenue (Bil $) Direct Expense (Bil $) Indirect Expense (Bil $) Adjusted EBITDA (Bil $) Free Cash Flow (Bil $) 2008 14.1 7.42 4.25 6.71 n/a 2009 14.9 8.05 2.06 6.86 n/a 2010 17.6 8.89 3.21 8.68 n/a 2011 21.5 12.2 4.82 9.34 n/a 2012 23.4 13.2 5.20 10.2 4.98 2013 25.4 14.3 5.65 11.1 5.45 2014 25.9 14.5 5.78 11.4 5.60 2015 25.7 14.3 5.76 11.3 5.57 2016 24.4 13.6 5.52 10.8 5.32 2017 23.3 12.9 5.24 10.4 5.13 2018 22.2 12.3 5.00 9.92 4.93
In addition, you can see the detailed P&L for the Google PC Search Ads business in the Appendix (link)
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Google Mobile Search Ads

The most important drivers for the Google Mobile Search Ads business are: Google's Revenue per Search on Mobile Devices Global Smartphones in Use Global Tablets in Use Internet Searches Per Mobile Device Google Mobile Search EBITDA Profit Margin
GOOGLE'S REVENUE PER SEARCH ON MOBILE DEVICES
Google's Revenue Per Search (RPS) represents the average advertising revenue generated by Google for every 1,000 searches conducted on Google.com and other websites on mobile devices. Revenue per search is primarily a function of the click through rate (CTR) on ads placed alongside search results, as well as the price paid by advertisers for every user click (CPC).
Google's Revenue per Search on Mobile Devices ($ per 1,000)
10.0 7.5 5.0 2.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Google's revenue per search on mobile has shown a modest increase 2007 to 2010, growing from below $6 to around $6.50 for the period. Advertisers are increasingly warming up to the idea of putting ads on mobile platforms, and as the scope of application widens, this figure is expected to increase further. Forecast Rationale Supporting: 1. INTEGRATION OF MOBILE WITH SERVICES SHOULD INCREASE Mobile devices are increasingly being adopted to perform online activities which were earlier reserved for PC's. Examples are web browsing, e-mails, audio and video viewing. Additionally, the portability of mobile phones has made it easier to integrate location-based services such as GPS and local deals. As further integration such as mobile payments gathers pace, advertisers should find the mobile as an effective marketing medium. This would be especially true for local advertising based on where a user is located
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at a particular time. 2. OPTIMIZATION OF E-COMMERCE WEBSITES DRIVING UP CONVERSION RATES The optimization of e-commerce sites will improve conversion rates and enable merchants to bid more for each click. In particular, online retailers are making significant improvements to improve their search facilities, ramping up their fraud detection technology, and adopting standardized money-back policies--all of which should help drive conversion rates up. 3. CAN GOOGLE INSTANT BRING MEANINGFUL INCREASES IN REVENUE PER SEARCH? Google Instant could help people search using terms that connect them more directly with the information they need. Advertisers will also benefit from higher conversion rates, making the average search term more valuable. However, Google Instant could probably bring down the click through rates, because each ad may be displayed several times as the user types letters into the search box, and users are unlikely to click on ads until they have completed their queries. 4. KEYWORD PRICE INFLATION A larger advertiser base and more automated bidding could increase the number of keywords that advertisers bid on. 5. GOOGLE CAN IMPROVE USER ENGAGEMENT Google could track the users Google Search history to understand their interests and preferences. It could also leverage Gmails growing popularity. If Google can successfully tap the users information on these different platforms, it could certainly bring about better targeted ads. Targeted ads helps increase the click through rates of the ads, which help the advertiser in realizing higher conversion rates. Googles RPS could benefit from that. Mitigating: 6. RISING SEARCH VOLUMES IN LOWER AVERAGE RPS SEARCH VERTICALS The search volume on Google is shifting away from high RPS search verticals--such as technology, finance, and retail--towards verticals such as entertainment, local, and consumer products, where monetization is appreciably lower. Lower monetization in certain verticals is attributable to lower pricing of search keywords (also known as Cost per Click) in those verticals. 7. INCREASING INTERNATIONAL MIX RPS in the US has always been more than the RPS in international markets. We would expect the international mix of total searches to increase going forward, which should be a drag on overall RPS. Sources for historical data and explanations can be found on the Trefis.com website (link)
GLOBAL SMARTPHONES IN USE
Global Smartphones in Use refers to the total number of smartphones in active use for a given year.
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Global Smartphones in Use (Bil)
2.0 1.5 1.0 0.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Smartphone growth over the last 2-3 years has been steep, with the number growing from around a 100 million in 2008 to around 350 million in 2010. Growth has come about as functionalities of mobile phones has greatly increased with features such as web browsing, audio and video viewing abilities. We expect smartphone growth to continue at a healthy rate going forward. Forecast Rationale Supporting: 1. INCREASED FUNCTIONALITY AND EASE OF USE Smartphone capabilities have increased significantly over the years, with its features closing up on PC capabilities. This includes high storage space, better mounted cameras, online shopping/payment and media capabilities such as listening music and watching videos. With the above features, the high portability of smartphones over PC's makes them the preferred choice over static and larger PC devices. Over the years, smartphones have also advanced considerably in technologies that make them easier to use. Examples are better user interfaces and capacitive touch screens. 2. HIGH BAND-WIDTH ENABLES BROADER SCOPE OF OPERATIONS For enabling a multitude of features beyond the basic function of communication, any mobile device (including smartphones and tablets) requires a higher-degree of data handling. Cellular wireless standards have been constantly improving, moving from 2G capabilities to 4G, which provide a downloading speed of around 100 Mbps. This growth consistently widens the scope of mobile usage. For example, 4G enables a much better video-call quality, and users can even watch TV programs on a mobile device with a clarity comparable to a television. As downloading speeds keep improving, mobile applications and usage should keep expanding, providing a user experience comparable to that of stationary devices like a PC. 3. EMERGING MARKETS (INDIA, CHINA, BRAZIL) TO DRIVE THE GROWTH The cellular penetration rate in emerging markets like China and India is still low. We expect more and more people to buy handsets, as wireless providers foray into rural areas, where the penetration is at very low levels. Handset companies will be the direct beneficiaries of high growth rates of new subscriptions expected for telecom providers. Sources for historical data and explanations can be found on the Trefis.com website (link)
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GLOBAL TABLETS IN USE
Global Tablets in Use refers to the total number of tablet devices in active use for a given year.
Global Tablets in Use (Mil)
750 500 250 0 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tablet devices have only been in active use since the launch of the first iPad, with the total tablet sales being around 18 million units in 2010. Given the rapid entry of multiple players in the tablet segment, we expect this segment to continue strong growth going forward. Forecast Rationale Supporting: 1. TABLETS OFFER THE BEST OF TWO WORLDS The evolution of the tablet was due to the fact that consumers wanted something that was more powerful than a smartphone as well as more portable than a laptop at the same time. Tablets have been very well able to fill both of those needs. As user experience improves and the media ecosystem gets richer, tablets will move from the early adopter to the mainstream market, causing the tablet market to increase exponentially. 2. DECLINING TABLET PRICING Apple's success with the iPad in the first year of its launch showed immense consumer appetite for tablets. This compelled its competitors to introduce their products in the market. Samsung launched its Galaxy Tab in Septmeber 2010. 2011 saw the launch of Playbook by RIM, XOOM by Motorola and Kindle Fire by Amazon. We believe that increasing competition and the entry of 7-inch tablets will decrease tablet pricing as has already been seen with Amazon's Kindle Fire which was launched at $199. RIM and Motorola have also been slashing prices of their respective tablets. Apple cut the price of the original iPad after launching the latest iPad 2. The frenzied run on HP's TouchPad once it was reduced to $99 is a strong indication that many customers are waiting for prices to come down before purchasing. 3. EMERGING MARKETS WILL DRIVE TABLET GROWTH Internet penetration in emerging markets like China and India is still low. We expect that as internet and broadband grows, consumer awareness and aspiration to own tablets will also grow, leading to more and more tablet sales. This will lead to Asian competitors emerging with cheaper alternatives driving tablet sales in such markets. A recent example is the Aakash, an Android-based tablet specifically
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designed to be affordable to low-income groups, with a basic price of $35. Sources for historical data and explanations can be found on the Trefis.com website (link)
INTERNET SEARCHES PER MOBILE DEVICE
Internet Searches Per Mobile Device represents the average number of Internet searches conducted on a mobile device per month.
Internet Searches Per Mobile Device (per Month)
70 60 50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Average searches on mobile devices has steadily grown, growing from under 10 in 2007 to around 35-40 for 2010. The growth has come about as smartphones and tablets have come to provide a host of different functionalities, including location search, GPS, maps, online shopping and online payments. As mobile devices continue to be integrated with more features, we expect Internet Searches Per Mobile Device to increase going forward. Forecast Rationale Supporting: 1. MOBILE CAPABILITIES TO EXPAND WITH TECHNOLOGICAL DEVELOPMENTS Higher integration with services and greater bandwidth are expected to drive mobile functionality even further, enabling mobile usage to become more comparable to that of PC's. For example, while tablets are majorly used as a lifestyle item currently, they are increasingly moving towards a workstation role as well. Microsoft for instance, is developing its MS Office applications specifically for the iPad. As mobile devices match PC usage level, search queries on mobile devices are expected to increase. 2. SMARTER WEB BROWSERS Web browser development has increasingly made it easier to promptly do a web search. For example, the Google Chrome obviates the need to actually open the Google homepage to do a search. The user can instead directly enter the search item in the URL space. Search capabilities are also increasingly being integrated into other tools like maps, videos, audio and local shopping. 3. BY DEFAULT, SEARCH DATABASE WOULD ONLY GROW MORE The nature of the web itself means that information is increasingly being added on to the internet. This would progressively add to the search database going forward.
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Sources for historical data and explanations can be found on the Trefis.com website (link)
GOOGLE MOBILE SEARCH EBITDA PROFIT MARGIN
Google Mobile Search EBITDA Profit Margin (%)
50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Google Mobile Search EBITDA Profit Margin has stayed around 47%-49% for the 2007-2010 period. 2011 margins have seen a significant drop, primarily as Google incurred higher SG&A costs on salary hikes and increased hiring. We expect EBITDA margins to show a slight increase going forward. Forecast Rationale Supporting: 1. SG&A COSTS TO BE MORE CONTROLLED Current (2011) levels of SG&A costs for Google have been higher than normal, as the company is extensively focusing on its manpower, giving salary hikes as well as hiring around 6000 employees by the end of 2011. We expect this high SG&A cost to reduce as a percentage of revenue in the long run, easing the EBITDA margins. Mitigating: 2. TRAFFIC ACQUISITION COSTS MAY RISE DUE TO RISING COMPETITION Search revenue made by Google from third parties involves the company paying its partners a share of the revenues, known as a traffic acquisition cost (TAC). Competition is steadily rising in the online advertising space, with other large tech companies like Amazon also pushing their respective ad businesses to improve margins. This may raise TAC for Google, putting downward pressure on margins.
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3. PRODUCT DELAYS TO PUSH UP OPERATING EXPENSES Google TV service did not meet expectations and received weak reviews from users, prompting Google to refine its software and causing delays in integrated product introductions with popular TV makers. Google has also announced delays for a few other projects like the Chrome OS for netbooks and Androids version for tablets. Chrome OS will now be launched in mid-2011, after initial expectations for launch during the second half of 2010. Sources for historical data and explanations can be found on the Trefis.com website (link) Total Revenue (Bil $) Direct Expense (Bil $) Indirect Expense (Bil $) Adjusted EBITDA (Bil $) Free Cash Flow (Bil $) 2008 0.11 0.06 0.03 0.05 n/a 2009 0.41 0.22 0.06 0.19 n/a 2010 1.000 0.51 0.18 0.49 n/a 2011 2.61 1.47 0.59 1.14 n/a 2012 4.36 2.45 0.97 1.91 0.93 2013 6.65 3.73 1.49 2.93 1.44 2014 9.54 5.32 2.14 4.22 2.07 2015 13.1 7.26 2.95 5.80 2.85 2016 16.7 9.24 3.79 7.44 3.65 2017 21.3 11.8 4.82 9.54 4.72 2018 26.9 14.8 6.08 12.1 6.00
In addition, you can see the detailed P&L for the Google Mobile Search Ads business in the Appendix (link)
Ad Partnerships for Search & Content

The most important drivers for the Ad Partnerships for Search & Content business are: Google Share of Partner Content Revenues Google Content Partner Page Views Partner Ads EBITDA Profit Margin
GOOGLE SHARE OF PARTNER CONTENT REVENUES
This represents the percentage of revenue that Google keeps from its AdSense for Content partnerships.
Google Share of Partner Content Revenues (%)
20.0 17.5 15.0 12.5 10.0 7.5 5.0 2.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
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Based on our estimates, Google's share of content partnership ad revenues has witnessed a gradual decline over the past few years; and we believe the proportion was near 14% in 2010. We expect that this proportion will decline. Forecast Rationale We considered the following factors for our forecast: 1. YAHOO! IS GETTING MORE COMPETITIVE IN THIS SPACE WITH ITS VERSION OF CONTENT ADS 2. MICROSOFT IS AGGRESSIVELY ENTERING THE DISPLAY/CONTENT ADVERTISING PARTNERSHIP SPACE 3. PURE-PLAY COMPETITORS LIKE ADSONAR ARE GAINING TRACTION. Sources for historical data and explanations can be found on the Trefis.com website (link)
GOOGLE CONTENT PARTNER PAGE VIEWS
This represents the total number of pages viewed on Google's AdSense for Content partner websites in a given year.
Google Content Partner Page Views (Bil)
5,000 4,000 3,000 2,000 1,000 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Based on our estimates, Google partner page views have increased from 2 trillion in 2006 to 3.8 trillion in 2010. We are forecasting an increase in Google Content Partner Page Views. Forecast Rationale We expect Google to continue to grow its content advertising partnership page views over the next few years, driven by: 1. THE ADDITION OF NEW PARTNERSHIPS 2. USAGE GROWTH ON EXISTING PARTNER WEBSITES. Sources for historical data and explanations can be found on the Trefis.com website (link)
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PARTNER ADS EBITDA PROFIT MARGIN
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) are profits after factoring in typical expenses, such as Cost of Goods and Services Sold, SG&A Expenses, and R&D Expenses. EBITDA Margin represents divisional EBITDA as a percentage of divisional revenues. We adjust EBITDA figures to exclude non-recurring charges and noncash charges, such as stock-based compensation expenses. Forecast Rationale After the next couple of years, we expect Adsense for Content profit margins to stabilize at around 58%, driven by: 1. ECONOMIES OF SCALE, AS FUTURE INVESTMENTS WILL BE SUPPORTED BY A LARGER GLOBAL FOOTPRINT RESULTING FROM MARKET SHARE GAINS 2. STABILIZATION IN "TRAFFIC ACQUISITION COSTS," AS MANY PARTNERS ARE NOW LOCKED UP IN LONG TERM REVENUE/SHARE ARRANGEMENTS 3. ANTICIPATED LEVERAGE IN "GENERAL & ADMINISTRATIVE" COSTS, AS THE COMPANY EXPANDS ITS REVENUE BASE.
Partner Ads EBITDA Profit Margin (%)
60 50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Sources for historical data and explanations can be found on the Trefis.com website (link) Total Revenue (Bil $) AdSense for Content (% of total) AdSense for Search (% of total) Direct Expense (Bil $) Indirect Expense (Bil $) Adjusted EBITDA (Bil $) Free Cash Flow (Bil $) 2008 0.78 80.1 19.9 0.31 0.30 0.47 n/a 2009 1.00 76.8 23.2 0.40 0.18 0.59 n/a 2010 1.47 74.1 25.9 0.61 0.32 0.86 n/a 2011 2.09 69.0 31.0 0.99 0.57 1.10 n/a 2012 2.43 63.9 36.1 1.15 0.65 1.27 0.62 2013 2.81 58.1 41.9 1.34 0.75 1.48 0.73 2014 3.21 52.5 47.5 1.52 0.86 1.69 0.83 2015 3.59 48.4 51.6 1.70 0.96 1.88 0.93 2016 3.93 45.5 54.5 1.87 1.05 2.06 1.01 2017 4.34 42.5 57.5 2.06 1.15 2.28 1.13 2018 4.79 39.5 60.5 2.28 1.27 2.52 1.25
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In addition, you can see the detailed P&L for the Ad Partnerships for Search & Content business in the Appendix (link)
YouTube
The most important drivers for the YouTube business are: Revenue per Page View Number of YouTube Users Page Views per User YouTube EBITDA Profit Margin
REVENUE PER PAGE VIEW
This represents the revenue that Google generates for every 1,000 pages viewed on YouTube.
Revenue per Page View ($ per 1,000)
12.5 10.0 7.5 5.0 2.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Revenue per Page View has increased from $0.96 in 2006 to $3.80 in 2011 per 1000 Views. We expect Revenue per Page View to increase driven by higher proportion of in-house sales of inventory and more content partnerships. Forecast Rationale We expect rapid and continued RPM (revenue per 1,000 page views) improvements on YouTube to continue, driven by: 1. HIGHER PROPORTION OF INVENTORY SOLD IN-HOUSE RATHER THAN VIA AD NETWORKS With Google, YouTube has access to Google's strong in-house sales teams, and does not need to rely as much on ad-networks, which are specialized agencies that help companies sell their advertising inventory--like ValueClick or RightMedia. Ad networks have extensive relationships with diverse advertisers, which helps them to fill inventory quickly, but such ads generally have lower associated RPMs. Also, publishers have to pay intermediation or agency fees to the ad-networks. As such, as Google increasingly uses its in-house sales to fill YouTube's inventory, we would expect the RPMs to go up as well.
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2. MORE CONTENT PARTNERSHIPS We would expect an increasingly higher proportion of pages on YouTube to be monetized in the years to come, as it continues to forge partnerships with professional content owners. For example, YouTube has deals with MGM for showing full length feature film clips and with Lionsgate for shorter clips. Lately, YouTube has become even more aggressive in creating original content, including opening over a 100 online video channels featuring globally renowned artists like Madonna and Jay-Z. The site is also striving for more labels like Warner Bros. to form their own channels, much like Vevo. These channels would make a much more attractive prospect for potential advertisers. 3. THE DEVELOPMENT OF VIDEO ADVERTISING AS A VIABLE AD FORMAT In contrast to search, which is more functional and commercial in nature, online videos and social networking are more entertainment-focused, where ads are generally seen as a distraction. Currently the ads displayed on such platforms are graphical and static in nature (i.e. text or image based). Such ads do not drive the same level of viewer recall as moving video ads (similar to television ads) do. Static ads are more relevant for social networking and other publishing content. As YouTube figures out better ways of displaying ads which are not intrusive and do not interfere much with the user experience (like Revision3's in-video interactive clickable ads), advertisers will be willing to pay more for such ads, which will drive the RPM up. 4. INCREASED USER TARGETING BASED ON BEHAVIORAL, DEMOGRAPHIC TARGETING Sources for historical data and explanations can be found on the Trefis.com website (link)
NUMBER OF YOUTUBE USERS
This represents the average number of monthly users who visit YouTube in a given year.
Number of YouTube Users (Mil)
750
500
250
0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
We estimate that around 560 million users visited YouTube on a monthly basis in 2011, an increase from nearly 200 million in 2007. We project Number of YouTube Users to increase till the end of Trefis forecast period.
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Forecast Rationale We have considered the following factors for our forecast: 1. YOUTUBE DOES NOT REQUIRE USERS TO REGISTER FOR THE SITE TO VIEW VIDEOS 2. INITIATIVES TAKEN BY YOUTUBE TO INCREASE THE VIRAL NATURE OF THE SITE (I.E. SENDING CLIPS TO FRIENDS, RATING VIDEOS, AND COMMENTING) 3. OUR EXPECTATION THAT YOUTUBE WILL CONTINUE TO EXPAND ITS INDEX OF CONTENT TO INCLUDE SHORT-FORM PREMIUM (PROFESSIONALLY-CREATED) CONTENT Sources for historical data and explanations can be found on the Trefis.com website (link)
PAGE VIEWS PER USER
This represents the average number of pages viewed by each YouTube visitor each month.
Page Views per User (per Month)
150 125 100 75 50 25 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
YouTube users have been consistently increasing their engagement levels with the site. Page views per user per month has increased from 45 in 2007 to around 107 in 2011; and we project it to increase till the end of Trefis forecast period. Forecast Rationale We expect YouTube users to demonstrate increasing levels of engagement in the future, driven by: 1. MORE CONTENT PARTNERSHIPS We would expect an increasingly higher proportion of pages on YouTube to be monetized in the years to come, as it continues to forge partnerships with professional content owners. For example, YouTube has deals with MGM for showing full length feature film clips and with Lionsgate for shorter clips. Lately, YouTube has become even more aggressive in creating original content, including opening over a 100 online video channels featuring globally renowned artists like Madonna and Jay-Z. The site is also striving for more labels like Warner Bros. to form their own channels, much like Vevo. These channels should garner more eyeballs from audiences as compared to low-quality user generated content. 2. BETTER INTEGRATION BETWEEN GOOGLE SEARCH, GOOGLE VIDEO, AND YOUTUBE.
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3. MORE EXPANSIVE COMMUNITY/PERSONALIZATION FEATURES Sources for historical data and explanations can be found on the Trefis.com website (link)
YOUTUBE EBITDA PROFIT MARGIN
YouTube EBITDA Profit Margin (%)
0 -25 -50 -75 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
We expect that YouTube margins would have expanded rapidly over the past few years, given the gradual improvement in monetization. However, we estimate that YouTube margins have been negative and are still negative. However, we expect YouTube profit margins to start improving, going forward, and expect YouTube to turn profitable in 2011. Forecast Rationale We considered the following factors for our forecast: 1. RAPID EXPECTED GROWTH IN MONETIZATION OF RPMS 2. SCALE BENEFITS FROM LEVERAGING GOOGLE'S NETWORK OF DATA CENTERS TO POWER VIDEO STREAMS 3. SCALE BENEFITS FROM EXPANDING GLOBAL FOOTPRINT However, we expect the margins to plateau after that and remain lower than Google's other businesses due to higher bandwidth costs of serving / hosting online videos as well as higher storage costs. Also, we expect that online content will move increasingly toward High Definition (HD) over time. HD uses 10x more bandwidth than standard definition, which should keep a continued upward bias on Google's costs that may not be fully offset by proportionate increases in monetization (CPM/RPM).
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Sources for historical data and explanations can be found on the Trefis.com website (link) Total Revenue (Bil $) Direct Expense (Bil $) Indirect Expense (Mil $) Adjusted EBITDA (Bil $) Free Cash Flow (Mil $) 2008 0.16 0.31 -93.4 -0.15 n/a 2009 0.41 0.69 -85.6 -0.28 n/a 2010 0.87 0.95 -32.1 -0.09 n/a 2011 1.49 1.34 77.2 0.15 n/a 2012 2.13 1.81 163 0.32 156 2013 2.93 2.49 223 0.44 215 2014 3.91 3.32 297 0.59 288 2015 5.12 4.35 390 0.77 377 2016 6.71 5.70 512 1.01 493 2017 8.79 7.47 666 1.32 652 2018 11.5 9.79 870 1.73 858
In addition, you can see the detailed P&L for the YouTube business in the Appendix (link)
Gmail & Orkut

The Gmail & Orkut division is part of the Gmail, Orkut, Blogger & Other business, and constitutes 1.10% of our $627 price estimate for the stock, based on our sum of the parts analysis.The most important drivers for the Gmail & Orkut business are: Gmail Revenue per Page View Number of Gmail Users Gmail & Orkut EBITDA Profit Margin
GMAIL REVENUE PER PAGE VIEW
This represents the revenue that Google generates for every 1,000 pages viewed on Gmail.
Gmail Revenue per Page View ($ per 1,000)
0.6 0.5 0.4 0.3 0.2 0.1 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Gmail Revenue per Page View increased from $0.20 per 1,000 page views in 2006 to $0.33 per 1,000 page views in 2010, as per our estimates.
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Forecast Rationale We expect Gmail RPM to grow, driven by the following factors: 1. BETTER TARGETING TECHNOLOGIES FOR CONTEXTUAL ADVERTISEMENTS 2. MORE ADVERTISEMENTS THROUGHOUT THE SITE 3. A LARGER ADVERTISER BASE FOCUSED ON CONTEXTUAL ADVERTISING. Sources for historical data and explanations can be found on the Trefis.com website (link)
NUMBER OF GMAIL USERS
This represents the average number of monthly users who visit Gmail in a given year.
Number of Gmail Users (Mil)
800 700 600 500 400 300 200 100 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
We estimate that around 225 million users visited Gmail on a monthly basis in 2010, an increase from 48 million in 2006. We project an increase over the forecast period. Forecast Rationale We expect Gmail to continue to add users at a rapid pace over the next several years, driven by the fact that: 1. GMAIL CONTINUES TO RECEIVE POSITIVE PUBLICITY BY BLOGGERS AND INFLUENTIAL PRODUCT REVIEWERS 2. GMAIL HAS BEEN INTEGRATED WITH ADDITIONAL GOOGLE SERVICES SUCH AS GOOGLE TALK AND GOOGLE CALENDAR 3. GMAIL CONTINUES TO INCREASE ITS STORAGE LIMIT ON A DAILY BASIS. Sources for historical data and explanations can be found on the Trefis.com website (link)
GMAIL & ORKUT EBITDA PROFIT MARGIN
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) are profits after factoring in typical expenses, such as Cost of Goods and Services Sold, SG&A Expenses, and R&D Expenses. EBITDA Margin represents divisional EBITDA as a percentage of divisional revenues. We adjust EBITDA figures to exclude non-recurring charges and non-
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cash charges, such as stock-based compensation expenses.
Gmail & Orkut EBITDA Profit Margin (%)
40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Gmail & Orkut EBITDA Profit Margin increased from 30% in 2007 to 40% in 2010, as per our estimates. Forecast Rationale We expect Gmail profit margins to expand over the next three years before stabilizing, due to: 1. RAPID GROWTH IN MONETIZATION (RPM) 2. SCALE BENEFITS FROM AN EXPANDING GLOBAL FOOTPRINT 3. LEVERAGE IN "GENERAL & ADMINISTRATIVE" COSTS AGAINST A GROWING REVENUE BASE. Sources for historical data and explanations can be found on the Trefis.com website (link) Total Revenue (Mil $) Gmail (% of total) Orkut (% of total) Direct Expense (Mil $) Indirect Expense (Mil $) Adjusted EBITDA (Mil $) Free Cash Flow (Mil $) 2008 175 25.7 74.3 113 38.8 61.3 n/a 2009 232 27.9 72.1 145 26.2 87.1 n/a 2010 257 36.3 63.7 154 38.1 102 n/a 2011 329 51.9 48.1 189 72.3 140 n/a 2012 392 61.3 38.7 225 85.2 166 81.7 2013 466 69.1 30.9 268 100 198 97.4 2014 527 74.8 25.2 303 113 223 110 2015 595 79.4 20.6 342 128 253 124 2016 680 83.4 16.6 391 147 289 141 2017 784 86.8 13.2 451 168 333 164 2018 912 89.5 10.5 524 195 387 192
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In addition, you can see the detailed P&L for the Gmail & Orkut business in the Appendix (link)
Google Phone
The most important drivers for the Google Phone business are: Google Phone Pricing Google Share of Global Mobile Phone Market Global Mobile Phone Units Google Phone EBITDA Margin
GOOGLE PHONE PRICING
Google Phone Pricing represents the price of the Nexus One that Google receives for every handset sold.
Google Phone Pricing ($)
500 400 300 200 100 0 2010 2011 2012 2013 2014 2015 2016 2017 2018
Google introduced the Nexus One in January 2010 at a price of $530 unlocked. Going forward, we believe Google phone pricing will decline at a fast rate initially as Google introduces lower priced versions of the phone and competition with other smartphone makers (Apple, RIM, Nokia) drives down prices. We believe that pricing declines will slow in the outer years of our forecast as the smartphone market matures. Forecast Rationale 1. PRICING PRESSURE FROM COMPETITORS SUCH AS APPLE IPHONE, MOTOROLA, NOKIA, AND RESEARCH IN MOTION Apple, Motorola, Nokia, and RIM are Google's biggest competitors in the smartphone space. Average smartphone prices have declined in recent years due to competition and the introduction of lower end smartphones. We believe that further competition from Google will lead to more aggresive pricing by mobile phone makers. 2. SMARTPHONES INCREASING COMMODITIZATION WILL BRING DOWN PRICES As smartphones become more and more commoditized, there will be a tendency for smartphone companies to lower the smartphone prices as the lower prices
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will be offset by growth in the number of smartphone buyers. This hypothesis is especially true for emerging markets, where the smartphone market is still in nascent stage. 3. WE EXPECT GOOGLE TO INTRODUCE MUTIPLE VERSIONS OF THE NEXUS ONE AT DIFFERENT PRICE POINTS IN ORDER TO APPEAL TO A BRODER SET OF TARGET CUSTOMERS We believe Google's multi-product strategy will mirror that of Apple's iPhone. When the iPhone was launched in 2007, it was initially priced at $500-$600 for consumers and earned Apple about $831 on average per phone (in combination with revenue share agreements with AT&T) but subsequent introductions of new phones at different price points led to an average price of $450 in 2008 Sources for historical data and explanations can be found on the Trefis.com website (link)
GOOGLE SHARE OF GLOBAL MOBILE PHONE MARKET
Google Share of Global Mobile Phone Market represents the number of Nexus One phones sold as a % of global mobile phones sold annually. Nexus One's primary competitors are phones made by Apple, Nokia, RIM (which makes BlackBerry phones), and Motorola.
Google Share of Global Mobile Phone Market (%)
0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 2010 2011 2012 2013 2014 2015 2016 2017 2018
The Google Phone (Nexus One) was launched in January 2010. We estimate Google Share of Global Mobile Phone Market to be 0.07% in 2010 representing about 1 million Nexus Ones sold. Google has announced that it will no longer sell Nexus Ones through its online store. Nexus One failed due to the following reasons: Google's Nexus One was available for purchase online only, whereas users like the touch and feel of the phone. Google didn't partner with any telecom provider. In the US, this strategy is successful as it becomes cost effective for users. Otherwise the customer has to pay the full upfront cost of the phone and then tie up with any telecom provider. For example, Apple iPhone 4 32 GB phone can be get for $299 with a two year contract with AT&T. Google didn't spend much money in advertising for Nexus One. Forecast Rationale 1. NEXUS ONE WILL CONTINUE TO BE SOLD IN INTERNATIONAL MARKETS Google has announced that although it is shutting down its online store in the US, Nexus One will continue to be sold in International markets through carriers like Vodafone in UK, KT in Korea, etc.
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2. GOOGLE MAY PARTNER WITH TELECOM PROVIDERS IN THE US Although telecom operators like Verizon and Sprint declined to partner with Google for selling Nexus One through their channels due to lower than expected sales, we believe Google may again try to partner with them in future. Google shutting down the online store could make the company focus on channel partnerships (retailers and telecom providers), which has traditionally been a successful strategy adopted by mobile phone companies to sell their phones. Sources for historical data and explanations can be found on the Trefis.com website (link)
GLOBAL MOBILE PHONE UNITS
Global Mobile Phone Units represents the number of mobile phone units sold each year globally.
Global Mobile Phone Units (Bil)
1.75 1.50 1.25 1.00 0.75 0.50 0.25 0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Historically, unit sales of mobile phones have increased from about 990 million units in 2006 to 1.5 billion units in 2010. Mobile Intelligence, a market research firm, estimated that the number of mobile phones in use was equivalent to about 50% of the world population in early 2008, a year in which about 1.2 billion mobile phones were sold. Wireless Intelligence, another market research firm, indicated that more than 5 billion mobile phones were in use in 2010, suggesting the equivalent of about 70% worldwide mobile penetration in 2010. During 2010, we estimate that about 1.5 billion mobile phones were sold. These figures suggest that a 20 percentage point increment in penetration corresponds to a 0.3-0.4 billion increment in mobile phone unit sales. If mobile penetration were to reach 90% of the world population of about 7 billion, this suggests that there would be another 0.3-0.4 billion increase in unit sales suggesting 1.81.9 billion mobile phones sold annually at that point. We estimate slightly higher unit sales of 2.1 billion annually by the end of the Trefis forecast period based on rising upgrade frequency as mobile phone prices decline further and demand for secondary phones. Forecast Rationale 1. INCREASING RELIANCE ON MOBILE PHONES AS PRIMARY MEANS OF COMMUNICATION The consumer's need for mobile phones has been increasing day-by-day as people want to be reachable and want to be able reach others all the time. As people are travelling more out of business or personal needs, mobile phones are the best means for them to be reachable.
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2. DECLINING HANDSET PRICING AS WELL AS MORE FLEXIBLE PRICING PLANS The handset pricing has been on a continuous decline due to decreasing input costs associated with making a mobile phone. On top of that, wireless carriers are giving highly subsidized phones--along with a 1-2 year contract--to the customers. These factors have contributed to an increase in sales across the world. 3. EMERGING MARKETS (INDIA, CHINA, BRAZIL) TO DRIVE THE GROWTH The cellular penetration rate in emerging markets like China and India is still low. We expect more and more people to buy handsets, as wireless providers foray into rural areas, where the penetration is at very low levels. Handset companies will be the direct beneficiaries of high growth rates of new subscriptions expected for telecom providers. 4. DEMAND FOR SECONDARY MOBILE PHONES We expect that there will be a rise in penetration beyond 100% in certain countries as the prevalence of secondary phones exceeds the number of people without any phones. Some countries already have penetration levels that exceed 100%, including Germany, Italy and the UK. Sources for historical data and explanations can be found on the Trefis.com website (link)
GOOGLE PHONE EBITDA MARGIN
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) are profits after factoring in typical expenses, such as Cost of Goods and Services Sold, SG&A Expenses, and R&D Expenses. EBITDA Margin represents divisional EBITDA as a percentage of divisional revenues.
Google Phone EBITDA Margin (%)
40 30 20 10 0 2010 2011 2012 2013 2014 2015 2016 2017 2018
We estimate that Google Phone EBITDA Margin was around 43% in 2010. We expect it to continue to decline. Forecast Rationale Supporting Factors 1. PRICING DECLINES TO HIGHER COMPETITION WILL REDUCE MARGINS Google is entering a smartphone market dominated by RIM's BlackBerry and Apple's iPhone. In addition, players like Nokia and Motorola all have smartphones and we expect smartphones to become an increasing percentage of all mobile phones in use. 2. INTRODUCTION OF LOWER PRICE POINT VERSIONS OF THE NEXUS ONE LIKELY TO REDUCE MARGINS We expect Google to introduce lower priced versions of the Nexus One that will appeal to a broader audience and that these
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versions will have lower margins 3. MORE ADVERTISING AND SELLING EXPENSES TO REMAIN COMPETITIVE In addition to lower gross margins on each device, EBITDA margins are expected to decline as Google spends more on advertising and selling expenses to compete effectively against pure-play mobile phone companies like Nokia and Motorola Mitigating Factors 4. INCREASE IN UNITS SOLD WILL REDUCE COMPONENT COSTS As Nexus One gains share and sells an increasing number of handsets, we expect that margins will improve due to improved scale efficiencies resulting from reduced component costs Sources for historical data and explanations can be found on the Trefis.com website (link) Total Revenue (Bil $) Direct Expense (Bil $) Indirect Expense (Mil $) Adjusted EBITDA (Mil $) Free Cash Flow (Mil $) 2008 n/a n/a n/a n/a n/a 2009 n/a n/a n/a n/a n/a 2010 0.42 0.24 66.4 179 n/a 2011 0.60 0.40 102 197 n/a 2012 0.77 0.57 102 200 98.1 2013 0.94 0.74 100 196 96.8 2014 1.12 0.93 96.4 189 93.4 2015 1.32 1.12 100 197 97.2 2016 1.51 1.29 115 227 111 2017 1.71 1.45 129 256 126 2018 1.89 1.61 143 284 141
In addition, you can see the detailed P&L for the Google Phone business in the Appendix (link)
Google Apps
The most important drivers for the Google Apps business are: Price per Paying Google Apps User Number of Google Apps Users Percent of Paying Google Apps Users Google Apps EBITDA Margin
PRICE PER PAYING GOOGLE APPS USER
Price per Paying Google Apps User is the annual price charged primarily to business customers. The pricing is based on the number of customer employees (users) that are using Google Apps.
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Price per Paying Google Apps User ($)
75 50 25 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
We estimate that Price per Paying Google Apps User has remained flat as Google was in various stages of ramping up its Google Apps and attracting a wider user base. We expect that in 2010 Google will maintain prices at $50 per user as it aggressively markets Google Apps to more companies in a bid to attract even more users. However, beyond 2010, we estimate Price per Paying Google Apps User to increase steadily. Forecast Rationale 1. NEW FEATURES WILL GOOGLE TO INCREASE PRICING OVER THE LONG RUN We expect Google will continue to add newer features, programs and capabilities to its line of applications that each user uses 2. GOOGLE WILL BE MORE AGGRESSIVE ON PRICING AFTER IT HAS A LARGER USER BASE We expect that by the end of 2010, Google will have 10 million paying users, thereby focusing not only on user base expansion but also on better monetization Sources for historical data and explanations can be found on the Trefis.com website (link)
NUMBER OF GOOGLE APPS USERS
Number of Google Apps Users includes both paying and non-paying users of Google Apps.
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Number of Google Apps Users (Mil)
60 50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
We estimate that Number of Google Apps Users has increased steadily and significantly from 4 million in 2007 to 50 million in 2010. Going forward, we estimate Number of Google Apps Users to continue to increase steadily, though at a slower than historical rate of growth, mainly driven by more large companies adopting Google apps. Forecast Rationale Supporting Factors 1. RECENT LARGE CUSTOMER WINS SUCH AS MOTOROLA AND GENENTECH WILL SPUR MORE WINS Google recently announced it successfully converted two large institutions - Motorola and Genentech - into using Google Apps. We believe this could spur other large companies to switch to using Google Apps as well. 2. GOVERNMENT CUSTOMER WINS WILL HELP DRIVE ADOPTION OF GOOGLE APPS AMONGST CONSUMERS AND SMALL BUSINESSES Adoption by government agencies and local governments can lead to more visibility amongst consumers and small businesses. "Google increasingly is going head-to-head against Microsofton prominent accounts, like the competition to replace the Los Angeles City governments outdated e-mail system, which is a multimillion-dollar project." - NY Times article by Steve Lohr dt. October 8, 2009 3. GOOGLE IS PLANNING TO MARKET GOOGLE APPS MORE AGGRESSIVELY THAN IT HAS IN THE PAST Google is about to launch an aggressive global ad campaign to promote its enterprise products. Tom Oliveri, director of enterprise marketing at Google, said the campaign - which will include online, print and outdoor ads will be one of the most visible Google has done and the most significant campaign for the enterprise side. Mitigating Factors 4. CONVERSION OF EXISTING MICROSOFT OFFICE USERS CAN BE A SLOW PROCESS According to a study by Forrester Research, Google's progress in Apps will come gradually. In a survey of 2,001 information workers, only 10 percent of the people using Microsoft Outlook said they would be happy to have their e-mail switched. Also, Microsoft Outlook has a huge lead. Seventy-four percent of those surveyed said they regularly used Outlook, compared with 7 percent for Google Gmail and 6 percent for Microsofts Web-based Hotmail. Sources for historical data and explanations can be found on the Trefis.com website (link)
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PERCENT OF PAYING GOOGLE APPS USERS
Percent of Paying Google Apps Users is the percent of users (out of the total user base which uses Google Apps) that pay Google for use of Google applications
Percent of Paying Google Apps Users (%)
7 6 5 4 3 2 1 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
We estimate that Percent of Paying Google Apps Users was around 6% in the past . Going forward, we estimate Percent of Paying Google Apps Users to remain constant. Forecast Rationale Supporting 1. COMPANIES SEEKING TO REDUCE IT EXPENSES WITH SOFTWARE DELIVERED REMOTELY AS A SERVICE WILL PREFER GOOGLE APPS We believe large companies are increasingly seeking cloud based services and solutions, in which software is accessed over the Internet and maintained at Google's data centers instead of on a company's computers. Cloud-based services can provide cost and maintenance savings over traditional software. In the absence of a similar software-as-a-service offering for Microsoft Office, companies preferring remotely delivered software are likely to choose Google Apps 2. CONVERSION TO CLOUD-BASED SOFTWARE SUCH AS GOOGLE APPS WILL TAKE TIME "Gartner analyst Tom Austin said most businesses will eventually switch to cloud-based email, but the process may take years. He noted IBM and Microsoft have introduced cloud products recently, and that Cisco Systems Inc appears to be preparing to offer its own cloud-based software." - Reuters article Mitigating 3. FASTER ADOPTION OF GOOGLE APPS BY CONSUMERS RATHER THAN BUSINESSES COULD DECREASE PAYING PERCENTAGE It is possible that consumer adoption of Google Apps could be faster than adoption by businesses. If Google's pricing structure remains the same in the future, then many of those consumers will not by paying leading to a decline in the paying user mix rather than increase
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Sources for historical data and explanations can be found on the Trefis.com website (link)
GOOGLE APPS EBITDA MARGIN
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) are profits after factoring in typical expenses, such as Cost of Goods and Services Sold, SG&A Expenses, and R&D Expenses. EBITDA Margin represents divisional EBITDA as a percentage of divisional revenues.
Google Apps EBITDA Margin (%)
50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
We estimate that Google Apps EBITDA Margin has increased steadily from 25% in 2007 to 50% in 2010, mainly driven by scale achieved within its apps business. Forecast Rationale Going forward, we expect Google Apps EBITDA Margin to remain flat as price increases are offset by aggressive sales and marketing costs. Sources for historical data and explanations can be found on the Trefis.com website (link) Total Revenue (Mil $) Direct Expense (Mil $) Indirect Expense (Mil $) Adjusted EBITDA (Mil $) Free Cash Flow (Mil $) 2008 112 78.4 21.3 33.6 n/a 2009 140 70.0 21.0 70.0 n/a 2010 126 63.0 23.3 63.0 n/a 2011 158 79.4 41.0 79.4 n/a 2012 200 100 51.1 100 49.0 2013 246 123 62.6 123 60.4 2014 277 138 70.4 138 68.3 2015 312 156 79.5 156 76.9 2016 336 168 85.7 168 82.6 2017 362 181 91.6 181 89.6 2018 389 194 98.2 194 96.8
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In addition, you can see the detailed P&L for the Google Apps business in the Appendix (link)
Search Appliances
The most important drivers for the Search Appliances business are: Revenue per Customer Search Appliance Customers Search Appliance EBITDA Profit Margin
REVENUE PER CUSTOMER
This represents the average revenue that each customer of Google's Search Appliance business generates.
Revenue per Customer ($ K)
12.5 10.0 7.5 5.0 2.5 0.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Google's Revenue per Customer in search appliances division has seen a steep fall in past two years, and we expect the trend to continue, going forward, as the mix of appliances sold shifts towards the Google Mini, which retails at less than $5,000 (compared to $30,000 for the big boxes). Sources for historical data and explanations can be found on the Trefis.com website (link)
SEARCH APPLIANCE CUSTOMERS
Google's Search Appliance provides enterprise employees and customers with the ability to search their internal sites (intranets) as well as external websites in a fast, easy manner using Google search technology. As just one of many examples, call centers will find Google's Search Appliance very useful for searching answers to customer questions in a timely manner, which will improve productivity and help lower costs. Some customers of Search Appliance are Kimberly Clark, Reuters, TiVo, and Honeywell.
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Search Appliance Customers (K)
35 30 25 20 15 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
We expect a robust growth in the future for Google's Search Appliance due to the launch of lower end products (Google Mini) and given the limited competition so far, which includes only a few players like Autonomy (the lead player in the space). Sources for historical data and explanations can be found on the Trefis.com website (link)
SEARCH APPLIANCE EBITDA PROFIT MARGIN
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) are profits after factoring in typical expenses, such as Cost of Goods and Services Sold, SG&A Expenses, and R&D Expenses. EBITDA Margin represents divisional EBITDA as a percentage of divisional revenues. We adjust EBITDA figures to exclude non-recurring charges and non-cash charges, such as stock-based compensation expenses.
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Search Appliance EBITDA Profit Margin (%)
35 30 25 20 15 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Going forward, we expect Google's profit margin for its "Search Appliance" business to remain steady at 35%, as technology driven cost savings are offset by lower prices and incremental features. Sources for historical data and explanations can be found on the Trefis.com website (link) Total Revenue (Mil $) Direct Expense (Mil $) Indirect Expense (Mil $) Adjusted EBITDA (Mil $) Free Cash Flow (Mil $) 2008 375 243 83.0 131 n/a 2009 384 249 40.4 134 n/a 2010 276 179 35.8 96.8 n/a 2011 253 165 45.9 88.9 n/a 2012 251 163 44.9 87.9 43.0 2013 256 166 45.6 89.7 44.1 2014 261 169 46.5 91.5 45.0 2015 266 173 47.4 93.3 45.9 2016 271 176 48.5 95.2 46.7 2017 277 180 49.1 97.1 48.0 2018 282 183 49.9 99.0 49.1
In addition, you can see the detailed P&L for the Search Appliances business in the Appendix (link)
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Blogger & Other Sites

The Blogger & Other Sites division is part of the Gmail, Orkut, Blogger & Other business, and constitutes 0.02% of our $627 price estimate for the stock, based on our sum of the parts analysis.The most important drivers for the Blogger & Other Sites business are: Revenue per Page View Page Views Other Sites EBITDA Profit Margin
REVENUE PER PAGE VIEW
This represents the revenue that Google generates for every 1,000 pages viewed on other Google sites such as Blogger, Google Reader, Google Groups, and Google Calendar.
Revenue per Page View ($ per 1,000)
0.35 0.30 0.25 0.20 0.15 0.10 0.05 0.00 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Revenue per Page View increased from $0.13 per 1,000 page views in 2007 to $0.21 per 1,000 page views in 2010, as per our estimates. Forecast Rationale We expect Revenue per Page View on Blogger and "Other Sites" to increase, driven by the following factors: 1. BETTER TARGETING TECHNOLOGIES FOR CONTEXTUAL ADVERTISEMENTS 2. MORE ADVERTISEMENTS THROUGHOUT THE SITE 3. A LARGER ADVERTISER BASE FOCUSED ON CONTEXTUAL ADVERTISING. Sources for historical data and explanations can be found on the Trefis.com website (link)
PAGE VIEWS
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Page Views represents the average number of pages viewed monthly by each visitor on other Google sites such as Blogger, Google Reader, Google Groups, and Google Calendar.
Page Views (Bil)
50 40 30 20 10 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Page views per user has increased from 12 billion in 2006 to 34 billion in 2010. Forecast Rationale We expect an increase in Page Views: 1. INCREASED POPULARITY OF BLOGGING 2. CROSS PROMOTION FROM GOOGLE'S OTHER PRODUCTS 3. INCREASED POPULARITY OF COMMUNITY WEBSITES. Sources for historical data and explanations can be found on the Trefis.com website (link)
OTHER SITES EBITDA PROFIT MARGIN
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Other Sites EBITDA Profit Margin (%)
35 30 25 20 15 10 5 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Other Sites EBITDA Profit Margin increased from 25% in 2008 to 33% in 2010, as per our estimates Forecast Rationale We expect profit margins for "Other Sites" to expand over the next three years before stabilizing, due to: 1. RAPID GROWTH IN MONETIZATION (RPM) 2. SCALE BENEFITS FROM AN EXPANDING GLOBAL FOOTPRINT 3. LEVERAGE IN "GENERAL & ADMINISTRATIVE" COSTS AGAINST A GROWING REVENUE BASE. Sources for historical data and explanations can be found on the Trefis.com website (link) Total Revenue (Mil $) Direct Expense (Mil $) Indirect Expense (Mil $) Adjusted EBITDA (Mil $) Free Cash Flow (Mil $) 2008 4.64 3.48 0.73 1.16 n/a 2009 5.57 3.90 0.50 1.67 n/a 2010 7.36 4.97 0.89 2.39 n/a 2011 8.91 5.79 1.61 3.12 n/a 2012 10.4 6.75 1.86 3.64 1.78 2013 11.8 7.70 2.11 4.14 2.04 2014 13.1 8.52 2.33 4.59 2.26 2015 14.5 9.44 2.59 5.08 2.50 2016 16.1 10.5 2.87 5.63 2.76 2017 17.8 11.6 3.15 6.24 3.09 2018 19.7 12.8 3.48 6.91 3.43
In addition, you can see the detailed P&L for the Blogger & Other Sites business in the Appendix (link)
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Appendix
Summary P&L for Google

Summary P&L for Google Total Revenues (Bil $) Google PC Search Ads (% of total) Google Mobile Search Ads (% of
total)
2008 2009 2010 2011 15.9 17.5 22.0 29.1 89.1 85.3 79.9 74.1 0.72 4.89 1.03 1.10 n/a 0.71 2.37 0.03 8.54 91.8 0.74 6.42 -2.02 0.84 n/a 0.46 1.79 0.02 7.32 91.8 0.74 6.42 -2.02 0.84 n/a 0.46 1.79 0.02 4.63 2.35 5.70 2.33 1.33 n/a 0.80 2.20 0.03 9.83 89.7 2.47 7.76 -3.72 1.14 n/a 0.92 1.76 0.02 7.65 89.7 2.47 7.76 -3.72 1.14 n/a 0.92 1.76 0.02 2.30 4.54 6.70 3.94 1.17 1.90 0.57 1.26 0.03 11.6 83.5 4.75 8.30 -0.83 0.99 1.73 0.61 0.93 0.02 10.4 83.5 4.75 8.30 -0.83 0.99 1.73 0.61 0.93 0.02 3.85 8.98 7.19 5.14 1.13 2.06 0.55 0.87 0.03 16.9 76.3 9.31 8.98 1.22 1.14 1.62 0.65 0.73 0.03 12.2 76.3 9.31 8.98 1.22 1.14 1.62 0.65 0.73 0.03 6.32
2012 33.9 68.9 12.8 7.15 6.28 1.16 2.27 0.59 0.74 0.03 19.7 71.5 13.4 8.94 2.24 1.17 1.41 0.70 0.62 0.03 14.2 71.5 13.4 8.94 2.24 1.17 1.41 0.70 0.62 0.03 7.27
2013 39.7 63.9 16.8 7.09 7.37 1.18 2.36 0.62 0.65 0.03 23.1 67.0 17.7 8.92 2.65 1.20 1.19 0.74 0.54 0.03 16.6 67.0 17.7 8.92 2.65 1.20 1.19 0.74 0.54 0.03 8.42
2014 2015 44.7 49.9 57.9 51.4 21.3 7.17 8.73 1.18 2.50 0.62 0.58 0.03 26.2 61.5 22.8 9.10 3.17 1.21 1.02 0.75 0.49 0.02 18.5 61.5 22.8 9.10 3.17 1.21 1.02 0.75 0.49 0.02 9.40 26.1 7.19 10.3 1.19 2.64 0.63 0.53 0.03 29.5 55.3 28.3 9.20 3.75 1.24 0.97 0.76 0.46 0.02 20.5 55.3 28.3 9.20 3.75 1.24 0.97 0.76 0.46 0.02 10.4
2016 2017 2018 54.6 60.9 68.8 44.8 38.3 32.2 30.5 7.20 12.3 1.25 2.78 0.62 0.50 0.03 32.5 49.0 33.6 9.33 4.55 1.31 1.03 0.76 0.43 0.03 22.1 49.0 33.6 9.33 4.55 1.31 1.03 0.76 0.43 0.03 11.3 35.0 7.13 14.4 1.29 2.80 0.60 0.46 0.03 36.5 42.5 39.1 9.34 5.41 1.37 1.05 0.74 0.40 0.03 24.4 42.5 39.1 9.34 5.41 1.37 1.05 0.74 0.40 0.03 12.3 39.0 6.96 16.7 1.33 2.75 0.57 0.41 0.03 41.6 36.5 44.4 9.25 6.35 1.43 1.04 0.72 0.36 0.03 27.2 36.5 44.4 9.25 6.35 1.43 1.04 0.72 0.36 0.03 13.7
Ad Partnerships for Search & Content (% of total) YouTube (% of total) Gmail & Orkut (% of total) Google Phone (% of total) Google Apps (% of total) Search Appliances (% of total) Blogger & Other Sites (% of total) Direct Expenses (Bil $) Google PC Search Ads (% of total) Google Mobile Search Ads (% of
total)
Ad Partnerships for Search & Content (% of total) YouTube (% of total) Gmail & Orkut (% of total) Google Phone (% of total) Google Apps (% of total) Search Appliances (% of total) Blogger & Other Sites (% of total) Adjusted EBITDA (Bil $) Google PC Search Ads (% of total) Google Mobile Search Ads (% of
total)
Ad Partnerships for Search & Content (% of total) YouTube (% of total) Gmail & Orkut (% of total) Google Phone (% of total) Google Apps (% of total) Search Appliances (% of total) Blogger & Other Sites (% of total) Indirect Expenses (Bil $)
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Summary P&L for Google continued Google PC Search Ads (% of total) Google Mobile Search Ads (% of
total)
2008 2009 2010 2011 91.8 89.7 83.5 76.3 0.74 6.42 -2.02 0.84 n/a 0.46 1.79 0.02 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 2.47 7.76 -3.72 1.14 n/a 0.92 1.76 0.02 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 4.75 8.30 -0.83 0.99 1.73 0.61 0.93 0.02 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a 9.31 8.98 1.22 1.14 1.62 0.65 0.73 0.03 n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
2012 71.5 13.4 8.94 2.24 1.17 1.41 0.70 0.62 0.03 6.97 71.5 13.4 8.94 2.24 1.17 1.41 0.70 0.62 0.03
2013 67.0 17.7 8.92 2.65 1.20 1.19 0.74 0.54 0.03 8.13 67.0 17.7 8.92 2.65 1.20 1.19 0.74 0.54 0.03
2014 2015 61.5 55.3 22.8 9.10 3.17 1.21 1.02 0.75 0.49 0.02 9.11 61.5 22.8 9.10 3.17 1.21 1.02 0.75 0.49 0.02 28.3 9.20 3.75 1.24 0.97 0.76 0.46 0.02 10.1 55.3 28.3 9.20 3.75 1.24 0.97 0.76 0.46 0.02
2016 2017 49.0 42.5 33.6 9.33 4.55 1.31 1.03 0.76 0.43 0.03 10.9 49.0 33.6 9.33 4.55 1.31 1.03 0.76 0.43 0.03 39.1 9.34 5.41 1.37 1.05 0.74 0.40 0.03 12.1 42.5 39.1 9.34 5.41 1.37 1.05 0.74 0.40 0.03
2018 36.5 44.4 9.25 6.35 1.43 1.04 0.72 0.36 0.03 13.5 36.5 44.4 9.25 6.35 1.43 1.04 0.72 0.36 0.03
Ad Partnerships for Search & Content (% of total) YouTube (% of total) Gmail & Orkut (% of total) Google Phone (% of total) Google Apps (% of total) Search Appliances (% of total) Blogger & Other Sites (% of total) Free Cash Flow (Bil $) Google PC Search Ads (% of total) Google Mobile Search Ads (% of
total)
Ad Partnerships for Search & Content (% of total) YouTube (% of total) Gmail & Orkut (% of total) Google Phone (% of total) Google Apps (% of total) Search Appliances (% of total) Blogger & Other Sites (% of total)
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Detailed P&L for the Google PC Search Ads business

The most important drivers for the Google PC Search Ads business are discussed above, here is the detailed P&L. Google PC Search Ads: Detailed P&L 2008 2009 2010 2011 Revenues Google PC Search Net Revenues
(Bil $)
2012 23.4 16.4 110 1.61
2013 25.4 15.8 112 1.77 67.0 25.4
2014 2015 25.9 15.2 113 1.86 67.5 25.9 25.7 14.5 113 1.90 68.0 25.7
2016 2017 24.4 14.0 114 1.86 68.5 24.4 23.3 13.4 115 1.82
2018 22.2 12.9 115 1.79
14.1 22.9 78.9
14.9 17.6
17.6 16.6
21.5 17.1 108 1.47
Google's Revenue per Search on PCs ($ per 1,000) Internet Searches Per PC in Use
(per Month)
90.0 101 1.32 65.5 17.6
Global PCs in Use (Bil) 1.000 1.20 Google's PC Search Market Share 65.2 65.4 (%) Total Revenues (Bil $) Expenses Direct Expenses (Bil $) Google's PC Search EBITDA Profit Margin (%) Indirect Expenses (Bil $) CapEx as a % of EBITDA (%) Effective Tax Rate (%) Change in Net Working Capital as a % of Sales (%) Increase in Net Other Operating Assets as % of Revenue (%) Total Expenses (Bil $) Adjusted EBITDA (Bil $) Free Cash Flow (Bil $) 14.1 14.9
66.0 66.5 21.5 23.4
69.0 69.5 23.3 22.2
7.42 47.5 4.25 25.2 20.5 6.24
8.05
8.89
12.2 43.4 4.82 28.1 23.9
13.2 43.6 5.20 28.2 23.9 3.57
14.3 43.8 5.65 28.3 23.9 3.27
14.5 44.0 5.78 28.4 23.9 2.97
14.3 44.2 5.76 28.5 23.9 2.67
13.6 44.4 5.52 28.6 23.9 2.37
12.9 44.6 5.24 28.7 23.9 2.07
12.3 44.8 5.00 28.8 23.9 1.77
46.0 49.4 2.06 10.6 29.0 3.21 38.7 24.5
-0.57 -11.9 3.87
-2.42 -1.56 0.72 11.7 6.71 n/a 10.1 6.86 n/a 12.1 8.68 n/a
-2.88 -2.38 -1.88 -1.38 -0.88 -0.38 -0.18 0.02 17.0 9.34 n/a 18.4 10.2 4.98 19.9 11.1 5.45 20.3 11.4 5.60 20.1 11.3 5.57 19.1 10.8 5.32 18.2 10.4 5.13 17.2 9.92 4.93
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Detailed P&L for the Google Mobile Search Ads business

The most important drivers for the Google Mobile Search Ads business are discussed above, here is the detailed P&L. Google Mobile Search Ads: Detailed P&L 2008 Revenues Google Mobile Search Net 0.11 Revenues (Bil $) Google's Revenue per Search on 5.97 Mobile Devices ($ per 1,000) Internet Searches Per Mobile 16.1 Device (per Month) Global Tablets in Use (Mil) n/a Global Smartphones in Use (Bil) 0.10 Google Mobile Search Market 99.0 Share (%) Total Revenues (Bil $) 0.11 Expenses Direct Expenses (Bil $) Google Mobile Search EBITDA Profit Margin (%) Indirect Expenses (Bil $) CapEx as a % of EBITDA (%) Effective Tax Rate (%) Change in Net Working Capital as a % of Sales (%) Increase in Net Other Operating Assets as % of Revenue (%) Total Expenses (Bil $) Adjusted EBITDA (Bil $) Free Cash Flow (Bil $)
2009 2010 2011 0.41 6.15 30.9 n/a 0.18 98.0 0.41 1.000 2.61 6.46 37.3 17.6 0.34 97.0 6.78 46.7 81.7 0.63 97.0
2012 4.36 7.12 53.7 196 0.78 96.8 4.36
2013 6.65 7.48 56.9 369 0.98 96.6 6.65
2014 2015 9.54 7.85 60.3 516 1.22 96.4 9.54 13.1 8.24 63.9 645 1.50 96.2 13.1
2016 2017 16.7 8.66 67.8 742 1.72 21.3
2018 26.9
9.09 9.54 71.8 854 1.98 76.2 939 2.28 95.6 26.9
96.0 95.8 16.7 21.3
1.000 2.61
0.06 0.22 47.5 0.03 25.2 20.5 6.24
0.51
1.47 43.6 0.59 28.1 23.9
2.45 43.8 0.97 28.2 23.9 3.57
3.73 44.0 1.49 28.3 23.9 3.27
5.32 44.2 2.14 28.4 23.9 2.97
7.26 44.4 2.95 28.5 23.9 2.67
9.24 44.6 3.79 28.6 23.9 2.37
11.8 44.8 4.82 28.7 23.9 2.07
14.8 45.0 6.08 28.8 23.9 1.77
46.0 49.4 0.06 0.18 10.6 38.7 29.0 24.5
-0.57 -11.9 3.87
-2.42 -1.56 0.72 0.09 0.28 0.05 n/a 0.19 n/a
-2.88 -2.38 -1.88 -1.38 -0.88 -0.38 -0.18 0.02 3.42 1.91 0.93 5.21 2.93 1.44 7.46 4.22 2.07 10.2 5.80 2.85 13.0 7.44 3.65 16.6 9.54 4.72 20.9 12.1 6.00
0.69 2.06 0.49 1.14 n/a n/a
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Detailed P&L for the Ad Partnerships for Search & Content business
The most important drivers for the Ad Partnerships for Search & Content business are discussed above, here is the detailed P&L. Ad Partnerships for Search & Content: Detailed P&L 2008 2009 2010 Revenues AdSense for Content (Bil $) 0.62 0.77 1.09 Google Share of Partner Content 11.6 13.9 16.8 Revenues (%) Google Content Partner Page 3001 3301 3753 Views (Bil) Content Partner Revenue per 1.79 1.67 1.75 Page View ($ per 1,000) AdSense for Search (Bil $) 0.15 0.23 0.38 Global PCs in Use (Bil) 1.000 1.20 1.32 Global Tablets in Use (Mil) n/a n/a 17.6 Global Smartphones in Use (Bil) 0.10 0.18 0.34 Global Searches per Internet User 4.04 4.44 4.80 on Partner Sites (per Month) Global Revenue per Search on 25.0 22.5 23.6 Partner Sites ($ per 1,000) Share of Partner Search Revenues 11.6 13.9 16.8
(%)
2011 1.44 19.4
2012 1.55 18.9
2013 1.63 18.4
2014 2015 1.69 17.9 1.74 17.4
2016 2017 1.79 16.9 4883 2.17 2.14 1.86 742 1.72 6.62 30.7 20.3 3.93 1.84 16.4
2018 1.90 15.9
4054 4297 4469 4603 4741 1.84 0.65 1.47 81.7 0.63 5.18 25.5 18.8 2.09 1.91 0.87 1.61 196 0.78 5.44 26.8 19.3 2.43 1.99 1.18 1.77 369 0.98 5.71 27.9 19.8 2.81 2.05 1.52 1.86 516 1.22 2.11 1.85 1.90 645 1.50
5030 5181 2.24 2.49 1.82 854 1.98 6.95 31.7 20.3 4.34 2.31 2.90 1.79 939 2.28 7.29 32.6 20.3 4.79
6.00 6.30 29.0 20.3 3.21 29.8 20.3 3.59
Total Revenues (Bil $) Expenses Direct Expenses (Bil $) Partner Ads EBITDA Profit Margin (%) Indirect Expenses (Bil $) CapEx as a % of EBITDA (%) Effective Tax Rate (%) Change in Net Working Capital as a % of Sales (%) Increase in Net Other Operating Assets as % of Revenue (%) Total Expenses (Bil $) Adjusted EBITDA (Bil $) Free Cash Flow (Bil $)
0.78
1.00
1.47
0.31 60.5 0.30 25.2 20.5 6.24
0.40 0.61 59.5 0.18 10.6 29.0 58.5 0.32 38.7 24.5
0.99 1.15 52.5 0.57 28.1 23.9 52.5 0.65 28.2 23.9 3.57
1.34 52.5 0.75 28.3 23.9 3.27
1.52 52.5 0.86 28.4 23.9 2.97
1.70 52.5
1.87 52.5
2.06 52.5 1.15 28.7 23.9 2.07
2.28 52.5 1.27 28.8 23.9 1.77
0.96 1.05 28.5 28.6 23.9 23.9 2.67 2.37
-0.57 -11.9 3.87
-2.42 -1.56 0.72 0.60 0.58 0.47 n/a 0.59 n/a 0.93 0.86 n/a
-2.88 -2.38 -1.88 -1.38 -0.88 -0.38 -0.18 0.02 1.56 1.10 n/a 1.80 1.27 0.62 2.09 1.48 0.73 2.38 1.69 0.83 2.66 1.88 0.93 2.92 2.06 1.01 3.21 2.28 1.13 3.55 2.52 1.25
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Detailed P&L for the YouTube business

The most important drivers for the YouTube business are discussed above, here is the detailed P&L. YouTube: Detailed P&L 2008 2009 2010 2011 Revenues YouTube (Bil $) Number of YouTube Users (Mil) Page Views per User (per Month) Revenue per Page View ($ per
1,000)
2012 2.13 616 125 4.58 50.0 2.13
2013 2.93 666 133 5.49 50.0 2.93
2014 2015 3.91 705 140 6.59 50.0 3.91 5.12 741 145 7.91 50.0 5.12
2016 2017 6.71 778 151 9.49 50.0 6.71 8.79 817 157 11.4 50.0 8.79
2018 11.5 858 163 13.7 50.0 11.5
0.16 276 54.7 1.81 50.0 0.16
0.41 375 74.1 2.44 50.0 0.41
0.87 487 97.1 3.05 50.0 0.87
1.49 560 116 3.81 50.0 1.49
Share of Partner Revenues (%) Total Revenues (Bil $) Expenses Direct Expenses (Bil $) YouTube EBITDA Profit Margin (%) Indirect Expenses (Mil $) CapEx as a % of EBITDA (%) Effective Tax Rate (%) Change in Net Working Capital as a % of Sales (%) Increase in Net Other Operating Assets as % of Revenue (%) Total Expenses (Bil $) Adjusted EBITDA (Bil $) Free Cash Flow (Mil $)
0.31
0.69 0.95
1.34
1.81 15.0 163 28.2 23.9 3.57
2.49 15.0 223 28.3 23.9 3.27
3.32 15.0 297 28.4 23.9 2.97
4.35 15.0 390 28.5 23.9 2.67
5.70 15.0 512 28.6 23.9 2.37
7.47 15.0 666 28.7 23.9 2.07
9.79 15.0 870 28.8 23.9 1.77
-90.0 -70.0 -10.0 10.0 -93.4 -85.6 -32.1 77.2 25.2 10.6 38.7 28.1 20.5 29.0 24.5 23.9 6.24 -0.57 -11.9 3.87
-2.42 -1.56 0.72 0.22 0.61 0.92
-2.88 -2.38 -1.88 -1.38 -0.88 -0.38 -0.18 0.02 1.42 1.97 0.32 156 2.71 0.44 215 3.62 0.59 288 4.74 0.77 377 6.22 1.01 493 8.14 1.32 652 10.7 1.73 858
-0.15 -0.28 -0.09 0.15 n/a n/a n/a n/a
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Detailed P&L for the Gmail & Orkut business

The most important drivers for the Gmail & Orkut business are discussed above, here is the detailed P&L. Gmail & Orkut: Detailed P&L 2008 2009 2010 2011 Revenues Gmail (Mil $) 45.0 Gmail Revenue per Page View ($ 0.28 per 1,000) Number of Gmail Users (Mil) Gmail Page Views per User (per
Month)
2012 240 0.37 420 130 151 0.22 47.4 1.21 392
2013 322
2014 2015 394 473 0.48 609 134 122
2016 2017 567 0.52 670 136 112 0.18 48.9 1.07 680 680 0.56 737 137 103 0.17 48.9 1.04 784
2018 817 0.60 811 138 95.8 0.16 48.9 1.01 912
64.8 0.28 161 120 167 0.25 41.4 1.35 232
93.5 0.28 225 124 163 0.24 43.4 1.29 257
171 0.32 350 127 158 0.23 45.6 1.25 329
0.40 0.44 504 132 144 0.21 48.9 1.17 466 554 133 132
115 115 130 0.23
Orkut (Mil $) Orkut Revenue per Page View ($

per 1,000)
0.20 0.19 48.9 1.14 527 48.9 1.11 595
Number of Orkut Users (Mil) 33.1 Orkut Page Views per User (K per 1.43 Month) Total Revenues (Mil $) Expenses Direct Expenses (Mil $) Gmail & Orkut EBITDA Profit Margin (%) Indirect Expenses (Mil $) CapEx as a % of EBITDA (%) Effective Tax Rate (%) Change in Net Working Capital as a % of Sales (%) Increase in Net Other Operating Assets as % of Revenue (%) Total Expenses (Mil $) Adjusted EBITDA (Mil $) Free Cash Flow (Mil $) 175
113 35.0 38.8 25.2 20.5 6.24
145 37.5 26.2 10.6 29.0
154
189
225 42.5 85.2 28.2 23.9 3.57
268 42.5 100 28.3 23.9 3.27
303 42.5 113 28.4 23.9 2.97
342 42.5 128 28.5 23.9 2.67
391 42.5 147 28.6 23.9 2.37
451 42.5 168 28.7 23.9 2.07
524 42.5 195 28.8 23.9 1.77
40.0 42.5 38.1 38.7 24.5 72.3 28.1 23.9
-0.57 -11.9 3.87
-2.42 -1.56 0.72 152 61.3 n/a 171 87.1 n/a 192 102 n/a
-2.88 -2.38 -1.88 -1.38 -0.88 -0.38 -0.18 0.02 261 140 n/a 310 166 81.7 369 198 97.4 416 223 110 471 253 124 538 289 141 619 333 164 720 387 192
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Detailed P&L for the Google Phone business

The most important drivers for the Google Phone business are discussed above, here is the detailed P&L. Google Phone: Detailed P&L 2008 2009 2010 2011 Revenues Google Phone Revenue (Bil $) Google Share of Global Mobile Phone Market (%) Global Mobile Phone Units (Bil) Google Phone Pricing ($) Total Revenues (Bil $) n/a n/a 1.22 n/a n/a n/a n/a 1.21 n/a n/a 0.42 2012 2013 2014 2015 1.32 0.24 1.56 344 1.32 2016 2017 1.51 0.29 1.62 327 1.51 1.71 0.32 1.69 311 1.71 2018 1.89 0.36 1.75 295 1.89
0.60 0.77 0.14
0.94 1.12 0.17 0.21
0.06 0.10 1.21 530 0.42
1.28 1.36 466 419 0.60 0.77
1.43 1.50 386 363 0.94 1.12
Expenses Direct Expenses (Bil $) n/a Google Phone EBITDA Margin n/a (%) Indirect Expenses (Mil $) CapEx as a % of EBITDA (%) Effective Tax Rate (%) Change in Net Working Capital as a % of Sales (%) Increase in Net Other Operating Assets as % of Revenue (%) Total Expenses (Bil $) Adjusted EBITDA (Mil $) Free Cash Flow (Mil $) n/a 25.2 20.5 6.24
n/a n/a n/a 10.6 29.0
0.24 43.0 66.4 38.7 24.5
0.40 0.57 33.0 102 28.1 23.9 26.0 102 28.2 23.9 3.57
0.74 21.0 100 28.3 23.9 3.27
0.93 17.0 96.4 28.4 23.9 2.97
1.12 15.0 100 28.5 23.9 2.67
1.29 15.0 115 28.6 23.9 2.37
1.45 15.0 129 28.7 23.9 2.07
1.61 15.0 143 28.8 23.9 1.77
-0.57 -11.9 3.87
-2.42 -1.56 0.72 n/a n/a n/a n/a n/a n/a 0.30 179 n/a
-2.88 -2.38 -1.88 -1.38 -0.88 -0.38 -0.18 0.02 0.50 197 n/a 0.67 200 98.1 0.84 196 96.8 1.02 189 93.4 1.22 197 97.2 1.40 227 111 1.58 256 126 1.75 284 141
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Detailed P&L for the Google Apps business

The most important drivers for the Google Apps business are discussed above, here is the detailed P&L. Google Apps: Detailed P&L 2008 2009 2010 2011 Revenues Google Apps Revenue (Mil $) Number of Google Apps Users
(Mil)
2012 200 36.0 7.00 79.4 200
2013 246 43.2 7.00 81.4 246
2014 2015 277 47.5 7.00 83.4 277 312 52.3 7.00 85.5 312
2016 2017 336 54.9 7.00 87.6 336 362 57.6 7.00 89.8 362
2018 389 60.5 7.00 92.1 389
112
140
126 25.0 7.00
158 30.0 7.00 75.6 158
20.0 25.0 7.00 7.00
Percent of Paying Google Apps Users (%) Price per Paying Google Apps User ($) Total Revenues (Mil $) Expenses Direct Expenses (Mil $) Google Apps EBITDA Margin
(%)
80.0 80.0 72.0 112 140 126
78.4 30.0 21.3 25.2 20.5 6.24
70.0 50.0 21.0 10.6 29.0
63.0 50.0 23.3 38.7 24.5
79.4 50.0 41.0 28.1 23.9
100 50.0 51.1 28.2 23.9 3.57
123 50.0 62.6 28.3 23.9 3.27
138 50.0 70.4 28.4 23.9 2.97
156 50.0 79.5 28.5 23.9 2.67
168 50.0 85.7 28.6 23.9 2.37
181 50.0 91.6 28.7 23.9 2.07
194 50.0 98.2 28.8 23.9 1.77
Indirect Expenses (Mil $) CapEx as a % of EBITDA (%) Effective Tax Rate (%) Change in Net Working Capital as a % of Sales (%) Increase in Net Other Operating Assets as % of Revenue (%) Total Expenses (Mil $) Adjusted EBITDA (Mil $) Free Cash Flow (Mil $)
-0.57 -11.9 3.87
-2.42 -1.56 0.72 99.7 33.6 n/a 91.0 70.0 n/a 86.3 63.0 n/a
-2.88 -2.38 -1.88 -1.38 -0.88 -0.38 -0.18 0.02 120 79.4 n/a 151 185 209 235 156 76.9 254 168 82.6 272 181 89.6 293 194 96.8
100 123 138 49.0 60.4 68.3
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Detailed P&L for the Search Appliances business

The most important drivers for the Search Appliances business are discussed above, here is the detailed P&L. Search Appliances: Detailed P&L 2008 2009 2010 2011 Revenues Search Appliances (Mil $) Search Appliance Customers (K) Revenue per Customer ($ K) Total Revenues (Mil $) Expenses Direct Expenses (Mil $) Search Appliance EBITDA Profit Margin (%) Indirect Expenses (Mil $) CapEx as a % of EBITDA (%) Effective Tax Rate (%) Change in Net Working Capital as a % of Sales (%) Increase in Net Other Operating Assets as % of Revenue (%) Total Expenses (Mil $) Adjusted EBITDA (Mil $) Free Cash Flow (Mil $) 375 27.0 13.9 375 384 32.5 11.8 384 276 29.3 9.44 276 253 29.9 8.50 253 2012 251 30.5 8.25 251 2013 256 31.1 8.25 256 2014 2015 261 31.7 8.25 261 266 32.3 8.25 266 2016 2017 271 33.0 8.25 271 277 33.6 8.25 277 2018 282 34.3 8.25 282
243 35.0 83.0 25.2 20.5 6.24
249 35.0 40.4 10.6 29.0
179 35.0 35.8 38.7 24.5
165 35.0 45.9 28.1 23.9
163 35.0 44.9 28.2 23.9 3.57
166 35.0 45.6 28.3 23.9 3.27
169 35.0 46.5 28.4 23.9 2.97
173 35.0 47.4 28.5 23.9 2.67
176 35.0 48.5 28.6 23.9 2.37
180 35.0 49.1 28.7 23.9 2.07
183 35.0 49.9 28.8 23.9 1.77
-0.57 -11.9 3.87
-2.42 -1.56 0.72 326 131 n/a 290 134 n/a 215 96.8 n/a
-2.88 -2.38 -1.88 -1.38 -0.88 -0.38 -0.18 0.02 210 88.9 n/a 208 87.9 43.0 212 89.7 44.1 216 91.5 45.0 220 93.3 45.9 225 95.2 46.7 229 97.1 48.0 233 99.0 49.1
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Detailed P&L for the Blogger & Other Sites business

The most important drivers for the Blogger & Other Sites business are discussed above, here is the detailed P&L. Blogger & Other Sites: Detailed P&L 2008 2009 2010 2011 Revenues Blogger & Other Sites (Mil $) Revenue per Page View ($ per
1,000)
2012 10.4 0.25 40.8 10.4
2013 11.8 0.27 43.5 11.8
2014 2015 13.1 0.29 45.4 13.1 14.5 0.31 47.5 14.5
2016 2017 16.1 0.32 49.6 16.1 17.8 0.34 51.8 17.8
2018 19.7 0.36 54.2 19.7
4.64 0.19 24.9 4.64
5.57 0.19 29.9 5.57
7.36 0.21 34.3 7.36
8.91 0.24 37.8 8.91
Page Views (Bil) Total Revenues (Mil $) Expenses Direct Expenses (Mil $) Other Sites EBITDA Profit Margin (%) Indirect Expenses (Mil $) CapEx as a % of EBITDA (%) Effective Tax Rate (%) Change in Net Working Capital as a % of Sales (%) Increase in Net Other Operating Assets as % of Revenue (%) Total Expenses (Mil $) Adjusted EBITDA (Mil $) Free Cash Flow (Mil $)
3.48 25.0 0.73 25.2 20.5 6.24
3.90 30.0 0.50 10.6 29.0
4.97 32.5 0.89 38.7 24.5
5.79 35.0 1.61 28.1 23.9
6.75 35.0 1.86 28.2 23.9 3.57
7.70 35.0 2.11 28.3 23.9 3.27
8.52 35.0 2.33 28.4 23.9 2.97
9.44 35.0 2.59 28.5 23.9 2.67
10.5 35.0 2.87 28.6 23.9 2.37
11.6 35.0 3.15 28.7 23.9 2.07
12.8 35.0 3.48 28.8 23.9 1.77
-0.57 -11.9 3.87
-2.42 -1.56 0.72 4.21 1.16 n/a 4.40 1.67 n/a 5.85 2.39 n/a
-2.88 -2.38 -1.88 -1.38 -0.88 -0.38 -0.18 0.02 7.40 3.12 n/a 8.61 3.64 1.78 9.80 4.14 2.04 10.9 4.59 2.26 12.0 5.08 2.50 13.3 5.63 2.76 14.7 6.24 3.09 16.3 6.91 3.43
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Google - 2012 02 16

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ANALYSIS for NASDAQ : GOOG FEBRUARY 16, 2012

GOOGLE PC SEARCH ADS

$203 B MKT CAP

$197.2 B MKT CAP

See the Full Analysis for Google on Trefis

Search Appliance Customers 37

Search Appliance EBITDA Profit Margin 38

Other Sites EBITDA Profit Margin 41

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Google PC Search Ads

Google's Revenue per Search on PCs ($ per 1,000)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Google's PC Search Market Share (%)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Global PCs in Use (Bil)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Internet Searches Per PC in Use (per Month)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Google's PC Search EBITDA Profit Margin (%)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Google Mobile Search Ads

Google's Revenue per Search on Mobile Devices ($ per 1,000)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Global Smartphones in Use (Bil)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

GLOBAL TABLETS IN USE

Global Tablets in Use (Mil)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Internet Searches Per Mobile Device (per Month)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Google Mobile Search EBITDA Profit Margin (%)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Ad Partnerships for Search & Content

Google Share of Partner Content Revenues (%)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

Google Content Partner Page Views (Bil)

TREFIS ANALYSIS for GOOGLE

+ 1 617 394 8763

PARTNER ADS EBITDA PROFIT MARGIN