Google announced today that its Board of Directors unanimously approved a stock dividend proposal designed to preserve the corporate structure that has allowed Google to remain focused on the long term. More information is available on our Investor Relations site, including a letter from founders Larry Page and Sergey Brin explaining the proposal, and in Google’s forthcoming proxy statement.

Here are the Q1 Financial Highlights

Revenues – Google reported revenues of $10.65 billion in the first quarter of 2012, representing a 24% increase over first quarter 2011 revenues of $8.58 billion. Google reports its revenues, consistent with GAAP, on a gross basis without deducting TAC.

Google Sites Revenues - Google-owned sites generated revenues of $7.31 billion, or 69% of total revenues, in the first quarter of 2012. This represents a 24% increase over first quarter 2011 revenues of $5.88 billion.

Google Network Revenues - Google’s partner sites generated revenues of $2.91 billion, or 27% of total revenues, in the first quarter of 2012. This represents a 20% increase from first quarter 2011 network revenues of $2.43 billion.

International Revenues - Revenues from outside of the United States totalled $5.77 billion, representing 54% of total revenues in the first quarter of 2012, compared to 53% in the fourth quarter of 2011 and 53% in the first quarter of 2011. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the fourth quarter of 2011 through the first quarter of 2012, our revenues in the first quarter of 2012 would have been $79 million higher. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2011 through the first quarter of 2012, our revenues in the first quarter of 2012 would have been $67 million higher.

•    Revenues from the United Kingdom totalled $1.15 billion, representing 11% of revenues in the first quarter of 2012, compared to 11% in the first quarter of 2011.
•    In the first quarter of 2012, we recognized a benefit of $37 million to revenues through our foreign exchange risk management program, compared to $14 million in the first quarter of 2011.

A reconciliation of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues is included at the end of this release.
Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 39% over the first quarter of 2011 and increased approximately 7% over the fourth quarter of 2011.

Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 12% over the first quarter of 2011 and decreased approximately 6% over the fourth quarter of 2011.

TAC - Traffic acquisition costs, the portion of revenues shared with Google’s partners, increased to $2.51 billion in the first quarter of 2012, compared to TAC of $2.04 billion in the first quarter of 2011. TAC as a percentage of advertising revenues was 25% in the first quarter of 2012, compared to 25% in the first quarter of 2011.

The majority of TAC is related to amounts ultimately paid to our Network members, which totalled $2.04 billion in the first quarter of 2012. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totalled $468 million in the first quarter of 2012.

Other Cost of Revenues - Other cost of revenues, which is comprised primarily of data centre operational expenses, amortization of intangible assets, content acquisition costs, and credit card processing charges increased to $1.28 billion, or 12% of revenues, in the first quarter of 2012, compared to $897 million, or 10% of revenues, in the first quarter of 2011.
Operating Expenses - Operating expenses, other than cost of revenues, were $3.47 billion in the first quarter of 2012, or 33% of revenues, compared to $3.34 billion in the first quarter of 2011, or 39% of revenues.

Stock-Based Compensation (SBC) – In the first quarter of 2012, the total charge related to SBC was $556 million, compared to $432 million in the first quarter of 2011.
We currently estimate SBC charges for grants to employees prior to March 31, 2012 to be approximately $2 billion for 2012. This estimate does not include expenses to be recognized related to employee stock awards that are granted after March 31, 2012 or non-employee stock awards that have been or may be granted.

Operating Income – GAAP operating income in the first quarter of 2012 was $3.39 billion, or 32% of revenues. This compares to GAAP operating income of $2.30 billion, or 27% of revenues, in the first quarter of 2011. Non-GAAP operating income in the first quarter of 2012 was $3.94 billion, or 37% of revenues. This compares to non-GAAP operating income of $3.23 billion, or 38% of revenues, in the first quarter of 2011.

Interest and Other Income, Net – Interest and other income, net increased to $156 million in the first quarter of 2012, compared to $96 million in the first quarter of 2011.
Income Taxes – Our effective tax rate was 18% for the first quarter of 2012.

Net Income – GAAP net income in the first quarter of 2012 was $2.89 billion, compared to $1.80 billion in the first quarter of 2011. Non-GAAP net income was $3.33 billion in the first quarter of 2012, compared to $2.64 billion in the first quarter of 2011. GAAP EPS in the first quarter of 2012 was $8.75 on 330 million diluted shares outstanding, compared to $5.51 in the first quarter of 2011 on 326 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2012 was $10.08, compared to $8.08 in the first quarter of 2011.

Cash Flow and Capital Expenditures – Net cash provided by operating activities in the first quarter of 2012 totalled $3.69 billion, compared to $3.17 billion in the first quarter of 2011. In the first quarter of 2012, capital expenditures were $607 million, the majority of which was related to IT infrastructure investments, including data centres, servers, and networking equipment. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the first quarter of 2012, free cash flow was $3.09 billion.

We expect to continue to make significant capital expenditures.
A reconciliation of free cash flow to net cash provided by operating activities, the GAAP measure of liquidity, is included at the end of this release.
Cash – As of March 31, 2012, cash, cash equivalents, and short-term marketable securities were $49.3 billion.
Headcount – On a worldwide basis, Google employed 33,077 full-time employees as of March 31, 2012, up from 32,467 full-time employees as of December 31, 2011.

Source: www.investor.google.com