Google Grows Profits And Sales As Ad Values Decline

Tom Jowitt is a leading British tech freelance and long standing contributor to TechWeek Europe

Google reveals strong financials as revenues rise 22 percent, but analysts still expected better

Google has revealed another strong set of financial results, as sales surged a healthy 22 percent.

Despite this, Wall Street remained somewhat unimpressed as it had been expecting better.

“Great Quarter”

For the second quarter ending 30 June, Google posted a net profit up 5.9 percent at $3.4 (£2bn), from $3.2bn (£1.9bn) in the same year-ago period. Revenues meanwhile were up a staggering 22 percent to $15.9 (£9.3bn) from $13.1bn (£7.7bn) previously.

Of course, advertising is the main income driver at Google and during the second quarter it accounted for 90 percent of Google’s revenues.

google-london-officeThe company also revealed that aggregate paid clicks from the Google ad network rose 25 percent during the quarter, while paid clicks from Google’s own sites (search, Maps, YouTube etc) were up 33 percent.

But Google continues to get less money for the adverts, as cost-per-click was down again in the quarter. “Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 6 percent over the second quarter of 2013,” said Google.

But Google did manage to keep keep its traffic acquisition costs (TAC) on a positive. TAC refers to the revenue that Google shares with its advertising partners, and total TAC was up 9.3 percent, year-on-year.

“Google had a great quarter with revenue up 22 percent year on year, at $16 billion”, said Patrick Pichette, CFO of Google. “We are moving forward with great product momentum and are excited to continue providing amazing user experiences, with a view to the long term.”

Business Expansion

Despite Wall Street expectations, the performance at Google is impressive, considering that the company also sold off its Motorola Mobile business to Lenovo in January this year, but the company continues to make money from selling its Nexus devices.

Google is also ploughing significant amounts of money expanding its business. This includes expansion of its data centre infrastructure, equipment, renewable energy, and of course its investment in fibre networks.

Despite hopes that Google would bring its 1Gbps fibre service to the UK, with a potential partnership with CityFibre, the search engine confirmed it had “no serious plans” for the UK market.

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