LIVE: Google Beats Q3 Earnings Expectations
Posted on October 15, 2009 |
Google beat third-quarter earnings expectations easily, posting a 7% rise in net revenues excluding payments to advertising partners, to $4.38 billion. Profit was $5.89 a share, handily beating forecasts.
Google had been expected to earn $5.40 a share on $4.23 billion in net revenues excluding payments to advertising partners, up from $4.92 a share on $4.04 billion in revenues a year ago.
“Google had a strong quarter -- we saw 7% year-over-year revenue growth despite the tough economic conditions,” Google CEO Eric Schmidt said in a statement. “While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future.”
Google's dominance of search advertising, with upwards of 75% of search ad revenues, means its results may be unique. But its quarterly results confirm that the slow recovery Google executives have been reporting recently is starting to pick up. That may buoy hopes for a wider range of players dependent on online ads, from Yahoo to Microsoft to many Web startups.
Here's the full release. Paid clicks, a key metric indicating the strength of the advertising business, rose 14% from a year ago. Cost per click, or the average amount advertisers on Google and its AdSense site partners paid, fell 6% from a year ago but rose 5% from the second quarter.
Free cash flow was $2.54 billion, meaning Google's producing at least $10 billion in cash flow annually. Employee count fell again, by 121 people, to 19,665.
Already, investors had been anticipating that the search giant will at least meet and probably beat expectations. Indeed, signs of a recovery in search advertising have been building in recent days.
Google's shares in after-hours trading were rising more than 3%. They had risen 67% so far this year, to an Oct. 14 close of $535.32, a new 52-week high. Just in the last month, shares are up 12% to the Nasdaq's 3%. Shares were down about 1% for the Oct. 15 trading session, more than the Dow and the Nasdaq.
On the analyst call starting at 1:30 p.m. Pacific, investors will be looking for insight on several issues:
* the outlook for the fourth quarter and beyond, though Google doesn't provide specific earnings forecasts.
* whether paid click growth and cost per click are showing any signs of improvement.
* information on profit margins, especially in coming quarters. Cost-cutting has kept them higher than expected in recent quarters, but CEO Eric Schmidt recently said Google would begin stepping up hiring again and would continue to make acquisitions.
* progress on YouTube, display ads, Android and mobile ads, and apps.
I'll liveblog the highlights of the earnings call here, so check back starting at 1:30 p.m. Pacific. You can also listen to the Webcast yourself, as well as an additional Q&A call with more Google executives at 3 p.m. Pacific.
And the call begins:
