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Currency still a slight headwind for 1Q results but improving We expect FX to remain a y/y headwind for 1Q results; the Euro is down about 6% y/y but up 1% from where it was when most Large-cap internet companies reported 4Q results in late January (~$1.06). The GBP at $1.22 is down slightly (1.4%) over the same period. Our currency strategist is forecasting the Euro to end 2017 at $1.05 and the GBP to end at $1.19. FX pressure will ease after 1Q if rates hold, unless a company has high exposure to Japan. Table 5: Percent change y/y Euro GBP Yen Other* 4Q15 -12.3% -4,.5% -8.1% -14.4% 1Q16 -2.0% -5.4% 1.1% -11.0% 2Q16 2.0% -4,.9% 9.4% -6.3% 3Q16 0.3% -13.9% 19.3% -2.9% 4Q16 -1.5% -17.4% 15.1% 0.0% 1Q17 -3.5% -14.5% 2.5% 3.3% 2Q17E -5.6% -15.4% -3.9% -0.3% 3Q17E -4.5% -9,.2% -9.9% -0.9% 4Q17E -1.2% -3.5% -8.1% 0.2% Source: BofA Merrill Lynch Global Research, Bloomberg, as of 4/4/2017 International revenues a percent of total revenues is highest at PCLN (87% of gross profit), GOOG (53%), FB (53%), TRIP (43%), EBAY (57%), and EXPE (42%). Higher operating margins in UK/Europe than US and lower Intl. taxes can increase this exposure. Chart 7: Spot Rate % Change Y/Y (USD vs. FX Spot Rate) 30% 20% 10% 0% -10% -20% -30% Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16Dec-16 Jan-17 Feb-17Mar-17 a——Euro = GBP ——Yen —Other Source: Bloomberg; Other Includes the following *Asian (KRW, AUD, HKD), Europe (RUB, SEK, CHF), Americas (BRL, MXN, CAD) , as of 4/4/2017 Bankof America <2 . Merrill Lynch Internet/e-Commerce | 06 April 2017 7 HOUSE_OVERSIGHT_014893