Google 8-K Google Announces Third Quarter 2007 Results

Exhibit 99.2

Google Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31, 2006*		September 30, 2007
			(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	3,544,671	$	5,106,404
Marketable securities		7,699,243		7,980,941
Accounts receivable, net of allowance		1,322,340		1,887,860
Deferred income taxes, net		29,713		87,963
Prepaid revenue share, expenses and other assets		443,880		670,593
Total current assets		13,039,847		15,733,761
Prepaid revenue share, expenses and other assets, non-current		114,455		170,069
Deferred income taxes, net, non-current		—		37,219
Non-marketable equity securities		1,031,850		1,048,138
Property and equipment, net		2,395,239		3,588,814
Intangible assets, net		346,841		485,252
Goodwill		1,545,119		2,277,397
Total assets	$	18,473,351	$	23,340,650
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	211,169	$	231,883
Accrued compensation and benefits		351,671		496,073
Accrued expenses and other current liabilities		266,247		400,889
Accrued revenue share		370,364		507,693
Deferred revenue		105,136		146,129
Total current liabilities		1,304,587		1,782,667
Deferred revenue, long-term		20,006		23,676
Deferred income taxes, net		40,421		—
Income taxes payable, long-term		—		406,555
Other long-term liabilities		68,497		90,981
Stockholders’ equity:
Common stock		309		312
Additional paid-in capital		11,882,906		12,831,437
Accumulated other comprehensive income		23,311		81,544
Retained earnings		5,133,314		8,123,478
Total stockholders’ equity		17,039,840		21,036,771
Total liabilities and stockholders’ equity	$	18,473,351	$	23,340,650

* Derived from audited financial statements.

Google Inc.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2006		2007		2006		2007
	(Unaudited)
Revenues	$	2,689,673	$	4,231,351	$	7,399,419	$	11,767,307
Costs and expenses:
Cost of revenues (including stock-based compensation expense of $2,149, $4,031, $6,754, $16,080)		1,048,728		1,662,579		2,941,879		4,693,261
Research and development (including stock-based compensation expense of $61,714, $130,655, $205,364, $408,425)		312,632		548,712		841,783		1,489,202
Sales and marketing (including stock-based compensation expense of $14,673, $29,918, $44,887, $93,553)		206,972		380,820		594,312		1,038,976
General and administrative (including stock-based compensation expense of $21,324, $33,352, $66,668, $105,288)		190,010		321,398		532,043		902,202
Total costs and expenses		1,758,342		2,913,509		4,910,017		8,123,641
Income from operations		931,331		1,317,842		2,489,402		3,643,666
Interest income and other, net		108,180		154,428		336,904		422,287
Income before income taxes		1,039,511		1,472,270		2,826,306		4,065,953
Provision for income taxes		306,150		402,281		779,577		1,068,682
Net income	$	733,361	$	1,069,989	$	2,046,729	$	2,997,271
Net income per share - basic	$	2.42	$	3.44	$	6.83	$	9.66
Net income per share - diluted	$	2.36	$	3.38	$	6.64	$	9.50
Shares used in per share calculation - basic		303,400		311,221		299,569		310,324
Shares used in per share calculation - diluted		310,574		316,576		308,245		315,638

Google Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months Ended September 30,
	2006			2007
	(Unaudited)
Operating activities
Net income	$	2,046,729		$	2,997,271
Adjustments:
Depreciation of property and equipment		335,629			565,841
Amortization of intangibles and warrants		47,060			111,881
Stock-based compensation		323,673			623,346
Excess tax benefits from stock-based award activity		(329,068	)		(238,577	)
Other		10,800			(7,215	)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable		(343,356	)		(559,425	)
Income taxes, net		528,493			431,048
Prepaid revenue share, expenses and other assets		(267,759	)		(237,262	)
Accounts payable		91,198			20,155
Accrued expenses and other liabilities		124,640			206,522
Accrued revenue share		90,856			136,446
Deferred revenue		10,819			32,131
Net cash provided by operating activities		2,669,714			4,082,162
Investing activities
Purchases of property and equipment		(1,536,160	)		(1,724,631	)
Purchases of marketable securities		(23,151,347	)		(11,756,147	)
Maturities and sales of marketable securities		19,888,930			11,519,001
Investments in non-marketable equity securities		(1,014,222	)		(21,288	)
Acquisitions, net of cash acquired, and purchases of intangible and other assets		(257,812	)		(823,092	)
Net cash used in investing activities		(6,070,611	)		(2,806,157	)
Financing activities
Net proceeds from stock-based award activity		155,551			19,073
Net proceeds from a public stock offering		2,063,751			—
Excess tax benefits from stock-based award activity		329,068			238,577
Net cash provided by financing activities		2,548,370			257,650
Effect of exchange rate changes on cash and cash equivalents		13,694			28,078
Net (decrease) increase in cash and cash equivalents		(838,833	)		1,561,733
Cash and cash equivalents at beginning of year		3,877,174			3,544,671
Cash and cash equivalents at end of period	$	3,038,341		$	5,106,404

The following table presents our revenues, by revenue source, for the periods presented (in thousands, unaudited):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2007			2006			2007
Advertising revenues:
Google web sites	$	1,625,977		$	2,734,756		$	4,355,754		$	7,503,167
Google Network web sites		1,037,022			1,454,721			2,961,965			4,152,102
Total advertising revenues		2,662,999			4,189,477			7,317,719			11,655,269
Licensing and other revenues		26,674			41,874			81,700			112,038
Revenues	$	2,689,673		$	4,231,351		$	7,399,419		$	11,767,307
The following table presents our revenues, by revenue source, as a percentage of total revenues for the periods presented (unaudited):
	Three Months Ended September 30,						Nine Months Ended September 30,
	2006			2007			2006			2007
Advertising revenues:
Google web sites		60	%		65	%		59	%		64	%
Google Network web sites		39	%		34	%		40	%		35	%
Total advertising revenues		99	%		99	%		99	%		99	%
Licensing and other revenues		1	%		1	%		1	%		1	%
Revenues		100	%		100	%		100	%		100	%