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Google 3Q Profit Soars 32%, Offers Rare Revenue Breakdown

Solid growth across Google’s core advertising business lines helped lift the search giant to a 32 percent annual increase in profits for the third quarter, a performance that handily beat analysts’ expectations. Google (NADASQ: GOOG) turned in net income of $2.17 billion, or $6.72 per share, ahead of a consensus forecast of $6.67. Net revenue, […]

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Kenneth Corbin

Oct 15, 2010

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Solid growth across Google’s core advertising business lines helped lift the search giant to a 32 percent annual increase in profits for the third quarter, a performance that handily beat analysts’ expectations.

Google (NADASQ: GOOG) turned in net income of $2.17 billion, or $6.72 per share, ahead of a consensus forecast of $6.67. Net revenue, which factors out the fees Google pays to its advertising partners, checked in at $5.48 billion, topping analysts’ estimate of $5.2 billion.

Google posted overall revenues of $7.29 billion for the quarter, up 23 percent from the third quarter in 2009.

“Our core business grew very well, and our newer businesses — particularly display and mobile — continued to show significant momentum,” CEO Eric Schmidt said in a statement. “Going forward, we remain committed to aggressive investment in both our people and our products as we pursue an innovation agenda.”

Google officials said the company hired 1,500 people in the third quarter, mostly in the engineering and sales divisions. They said the company has no intention of slowing hiring while competition for top technical talent remains fierce.

Google’s revenues from advertising, which accounts for more than 96 percent of the company’s earnings, soared 22 percent over the year-earlier period. The lion’s share of that money comes from search ads — small text links placed alongside relevant search results. But Google has been working to expand its advertising business into other formats, such as display and mobile, though the company has historically kept hard number close to the vest.

Until today. On a conference call, Google executives divulged some figures about the company’s various business lines that have never before been made public, warning their audience of financial analysts not to expect similar disclosures in the future.

The display business, which Google defines as nontext ads served on YouTube, the Google network of sites and the network of its DoubleClick division, is projected to generate $2.5 billion in revenue over the coming year.

“Clearly we’re firing on all cylinders in display,” said Jonathan Rosenberg, Google’s senior vice president of product management.

Rosenberg declined to break out revenue figures for YouTube (or even say whether the popular video site is turning a profit), but he boasted that the site is now monetizing more than 2 billion views each week, up 50 percent from the same time last year.

And in mobile, where Google has been particularly active in promoting its search engine and other applications along with the Android operating system, the company is on track to bank $1 billion in annual revenue.

“All these businesses are growing,” Rosenberg said, noting that the company is particularly bullish on mobile

“Clearly this is the future of search and the Internet — more people in more countries coming online with these smartphones,” he said. “Search is still at the heart of the Web, and with all of this new content coming online, doing search well is harder than ever.”

International operations accounted for 52 percent of the company’s revenue in the third quarter.

Kenneth Corbin is an associate editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.