Search giant Google on Thursday reported double-digit revenue growth for the second quarter, though its earnings fell short of analysts’ expectations, causing the stock to take a hit in after-hours trading. Google (NADSAQ: GOOG) reported second-quarter earnings of $6.45 per share, well ahead of last year’s mark of $5.36 per share, but short of analysts’ […]
Search giant Google on Thursday reported double-digit revenue growth for the second quarter, though its earnings fell short of analysts’ expectations, causing the stock to take a hit in after-hours trading.
Google (NADSAQ: GOOG) reported second-quarter earnings of $6.45 per share, well ahead of last year’s mark of $5.36 per share, but short of analysts’ projection of $6.52.
Overall, the company posted revenues of $6.82 billion, up 24 percent from the $5.52 billion the company netted in the year-earlier period.
Less the fees paid to advertising partners, Google reported revenue of $5.1 billion, beating analysts’ projection of $4.98 billion.
All told, revenues from advertising accounted for more than 96 percent of Google’s revenues in the second quarter. Sixty-six percent of its total revenue, or $4.5 billion, derived from ads sold on Google’s sites, with 30 percent, or $2.06 billion, coming from its AdSense partners’ Web properties.
Revenues from Google’s owned sites and its AdSense partners both increased 23 percent over the year-earlier period.
Google said the total volume of paid clicks on its sites and its AdSense partners’ properties increased 15 percent over the second quarter of 2009, but dropped off 3 percent from the first quarter of this year.
In a statement, CEO Eric Schmidt touted the strength of Google’s core business, and highlighted the increasing convergence of multiple digital ad channels.
“We saw strength in every major product area, as more and more traditional brand advertisers embraced search advertising and as large advertisers increasingly ran integrated campaigns across search, display and mobile,” said Schmidt, who did not take part in today’s earnings call with analysts. “We feel confident about our future, and plan to continue to invest aggressively in our core areas of strategic focus.”
During a Q&A session with financial analysts following Google’s earnings release, company executives were asked whether its investment in the Android mobile operating system was paying off.
CFO Patrick Pichette said Google could easily afford to invest in the mobile platform, noting the cost of its Android’s investment “is not material to the company.” He also emphasized that many of the new Android-powered devices, like the just-released Motorola’s Droid Xoffered by Verizon Wireless, were developed outside of Google.
“It’s not a huge resource investment for us and it’s a formidable return in that you have the entire ecosystem exploding,” Pichette said.
In terms of payback for Google, senior vice president of product management Jonathan Rosenberg said the most popular application on Android devices is the Web browser. “And these users do search a magnitude more than on any previous smartphone,” Rosenberg said. “It’s the formula for how Google succeeds.”
Rosenberg said over 160,000 Android devices are purchased every day.
“Mobile search grew 500 percent in the last two years in terms of traffic. Think of Android as an accelerator,” added Nikesh Arora, Google’s president of global sales operations and business development.
Another big area of investment for Google is its YouTube video community site. Investors have questioned the company’s $1.65 billion purchase of YouTube, which took place back in 2006, and Google’s ongoing investment in the site. Analysts believe it will take some time before YouTube is profitable, but Pichette said the company is “incredibly pleased by its trajectory with 2 billion page views a day.”
Pichette said more top brands, including Proctor & Gamble and Coca-Cola, were using YouTube as part of integrated ad campaigns across Google’s network.
Asked if there was any change in Google’s situation in China — the company has threatened to leave in the face of government censorship — Pichette said he had little new to report.
“On China we’re basically at same place as when we last talked about it,” he said. “The good news is we have our license renewal…. Given the sensitivity of the situation, we don’t want to talk any more about it. We’re working hard to work through the situation.”
Updated to include comments made by Google officials during conference call with financial analysts.
David Needle is the West Coast bureau chief at InternetNews.com, the news service of Internet.com, the network for technology professionals.
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David Needle is a veteran technology reporter based in Silicon Valley. He covers mobile, big data, customer experience, and social media, among other topics. He was formerly news editor at Infoworld, editor of Computer Currents and TabTimes, and West Coast bureau chief for both InformationWeek and Internet.com.
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