Alphabet Inc. (NASDAQ:GOOGL) Q4 2014 Earnings Conference Call - Final Transcript

Jan 29, 2015 • 04:30 pm ET


Alphabet Inc. (NASDAQ:GOOGL) Q4 2014 Earnings Conference Call - Final Transcript


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Good day, everyone and welcome to the Google Inc. Fourth Quarter 2014 Earnings Conference Call. This call is being recorded. At this time I'd like to turn the call over to Ellen West, Vice President, Investor Relations. Please go ahead.

Ellen West

Thanks so much, Jamie. Good afternoon, everyone, and welcome to Google's fourth quarter 2014 earnings conference call. With us today are Patrick Pichette and Omid Kordestani. As you know, we distribute our earnings release through our Investor Relations website located at So please refer to our IR website for our earnings releases as well as the supplementary slides that accompany the call. This call is also being webcast from A replay of the call will be available on our website later today.

(Forward-Looking Cautionary Statements)

With that, I will now turn the call over to Patrick.

Patrick Pichette

Thanks, Ellen. And welcome to 2015 everyone. Before we get into the numbers, I am going to give a brief overview of our performance this quarter, as the data is actually quite noisy through the P&L. So to start, let's say that we saw continued strength in our core advertising business. This was really driven by a strong holiday and mobile performance from our Sites line. We saw a great momentum in our programmatic business highlighted by our mobile display and our ads platform product.

But we also faced a few real challenges as well, on the revenue side, clearly as you heard out, the strengthening of the U.S. dollar resulted in a gross negative currency impact of $616 million just into Q4, but thanks to our hedging program, the net impact was actually attenuated with a net revenue impact of $468 million.

Also on the other revenue line, not only did we see that negative currency impact really impact the Play growth, particularly in Japan, but also while the Nexus 7 was very well received as a new phone, we had real issues and unable to secure sufficient inventory to meet the demand that we had forecasted. So for both these factors in fact, we see lower other revenue growth this quarter.

On the expense side, we had a number of unusual charges to our operating expenses hit this quarter. I'll provide you more details in a few minutes as we go through the conversation, but together these items added up to slightly over $300 million in expenses to our P&L.

Lastly, if you go to the CapEx line, you will note that we've made real estate purchases in Q4, which helped us relieve both pressure on our work space for current employees, but also to accommodate our future growth. And this also resulted in a large sequential increase in our real estate capital expenditures this quarter.

So now that you have the basics, why don't we dive into the details? Our gross total consolidated revenue grew 15% year-over-year to $18.1 billion, and it was up 10% quarter-over-quarter. Without currency fluctuations, our gross consolidated revenue growth would have in fact been 18%