Google 2014 Annual Report Download - page 33

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Sales and marketing expenses consist primarily of:
•
Labor and facilities-related costs for our personnel engaged in sales and marketing, sales support, and certain customer
service functions;
•Advertising and promotional expenditures related to our products and services; and
•
Stock-based compensation expense for our employees engaged in sales, sales support, and certain customer service functions.
Sales and marketing expenses increased $1,577 million and increased slightly as a percentage of revenues from 2013 to 2014.
The increase was primarily due to an increase in advertising and promotional expenses of $614 million. In addition, there was an
increase in labor and facilities-related costs of $571 million and an increase in stock-based compensation expense of $163 million,
both largely resulting from a 15% increase in sales and marketing headcount. Sales and marketing expenses increased slightly as a
percentage of revenues primarily due to an increase in advertising and promotional expenses relative to the increase in revenues.

2012 to 2013. The increase in expenses was primarily due to an increase in advertising and promotional expenses of $674 million,
as well as an increase in labor and facilities-related costs of $233 million and an increase in stock-based compensation expense
of $103 million, both largely resulting from a 13% increase in sales and marketing headcount.
We expect that sales and marketing expenses will increase in dollar amount and may increase as a percentage of revenues in
2015 and future periods.
General and Administrative
The following table presents our general and administrative expenses, and those expenses as a percentage of revenues, for the
periods presented (dollars in millions):
Year Ended December31,
2012 2013 2014
General and administrative expenses $3,481 $4,432 $5,851
General and administrative expenses as a percentage of revenues 7.6% 8.0% 8.9%
General and administrative expenses consist primarily of:
•

legal organizations;
•
Professional services fees primarily related to outside legal, audit, information technology consulting, and outsourcing services;
•Amortization of certain intangible assets; and
•Stock-based compensation expense.
General and administrative expenses increased $1,419 million and also increased as a percentage of revenues from 2013 to 2014.
The increase was primarily due to an increase in labor and facilities-related costs of $576 million and an increase in stock-based
compensation expense of $260 million, both largely resulting from a 24% increase in general and administrative headcount. In
addition, there was an increase in professional services related expense of $314 million due to higher legal-related costs, as well as
additional consulting and outsourced services. General and administrative expenses increased as a percentage of revenues primarily
due to an increase in labor and facilities-related costs and stock-based compensation expense relative to the increase in revenues.
General and administrative expenses increased $951 million from 2012 to 2013 and as a percentage of revenues remained

of $396 million, largely resulting from a 15% increase in general and administrative headcount, an increase in depreciation and
equipment-related expense of $222 million, as well as an increase in amortization of acquired intangible assets of $157 million.

2015 and in future periods.
Stock-Based Compensation
The following table presents our aggregate stock-based compensation expense, and stock-based compensation as a percentage

Year Ended December31,
2012 2013 2014
Stock-based compensation $2,473 $3,127 $ 4,175
Stock-based compensation as a percentage of revenues 5.4% 5.6% 6.3%
27GOOGLE INC.

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