Indeed, Google seems the golden child among its rivals eBay and Yahoo, which have been dogged with slowing growth of late. Not Google. The company said it plans to continue to expand globally and build new products, with a focus on mobile markets, while investing primarily in its search and advertising businesses.
We don’t see any signs of approaching any limits to our vision. The opportunities are unlimited to us at this point, said Google chief executive Eric Schmidt, on a conference call.
The company during the second quarter earned $721m, or $2.33 a share, up from $343m, or $1.19, a year ago. Analysts had, on average, expected $1.95. Quarterly revenue of $2.46bn slightly beat analyst forecasts of $2.4bn, on average. CFO George Reyes noted that despite the expected seasonal summer slowdown, Google saw continued healthy growth in its ad base.
The bulk of sales, $1.4bn or 58% of total revenue, came from the US, with Europe continuing to drive most growth overseas, Reyes said. International revenue drove 42%, or $1bn, of total revenue, with the UK leading the charge in Europe by bringing in $370m.
Cofounder and president of products Larry Page said Google was making international search a top priority and was working to bring more products to mobile PCs. We want to make Google available in a device-independent way, he said, noting the launch of Mobile Ads in Japan last April. We will roll out in additional countries later this year, he added.
However, Mountain View, California-based Google benefited from more favorable foreign exchange rates during the quarter, to the tune of about $26m, Reyes said.
Partnerships also helped buoy the company. The company spent $785 in traffic acquisition costs, or 32% of its ad revenues, to affiliates that drove traffic to Google ads.
Schmidt stressed the importance of partnerships to Google and said it plans to continue to expand partner deals, with many, many more coming, Schmidt said. He noted that Google also hopes to become a really big player in the market for display ads, and that it is executing on milestones with its display ad partnership with AOL. He did not give specifics.
He noted that the majority of revenue sharing on partnerships has typically gone to the partner, such as AOL or Ask Jeeves. We get tremendous benefit from that, though, because those advertisers become part of our overall network, he said. There may be other ways of doing it than just revenue sharing, he said later.
Google network revenues grew 58% during the quarter, from a year ago, thanks to a combination of renewing and expanding existed partnerships, said Omid Kordestani, SVP of global sales and business development. There were no significant new partner additions, he said.
Google added more than 1,000 new workers during the quarter, bringing its total headcount to 7,942. The company plans to continue to hire aggressively around the world, particularly next quarter in sales, marketing and R&D.
Many of those new workers will staff offices in some of Google’s most challenging markets, including Russia, China and Korea. Brin said the company recently opened an engineering office in Moscow, as well as a sales office, to begin to address some of the unique language features in Russia.
In China, the company also is building up staff levels and beginning to address some of the region-specific issues, such as connectivity availability and late fee issues, he said.
Google also is very much interested in continuing its investments in Japan, Kordestani said. We are very focused on expanding our engineering and product presence there.
During the quarter, Google launched in the US its Checkout payment service, which Page said was a way to increase click rates for advertising from Google and increase the amount of purchases on Google, rather than build a stand-alone business.
We were really thinking about the [Checkout] business as a way of adding to our overall ad network, he said.
Shares in Google rose slightly, by nearly 1%, to $390.70 in after-hours trading on the Nasdaq following the news, after having lost nearly 3% of their value ahead of the earnings announcement.
