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Friday, April 16, 2010

Google Announces Q1 Earnings, Beats Analyst Estimates But Shares Drop

This afternoon Google released its earnings for Q1 2010.

The company beat analyst expectations, though the stock has fallen nearly 5% in after-hours trading as some investors were hoping for more. Revenue was up 23% for $6.77 billion, with net revenue at $5.06 billion (estimate was $4.93 billion). Net income rose 37% to $1.96 billion, or $6.06 EPS; non-GAAP EPS was $6.76, beating estimates of $6.60.

66% of total revenue, or $4.44 billion, came from Google-owned properties, with 30% ($2.04 billion) from partner sites through AdSense. Paid clicks were up 15% Y/Y and cost-per-click was up 7% Y/Y.

Google has $26.5 billion in cash, and has grown to 20,621 employees up from 19,835 at the close of 2009 — in other words, they’re hiring.

Below are my notes from Google’s conference call, which included responses from:
CFO Patrick Pichette
SVP, Engineering Jeff Huber
VP of Product Management Susan Wojcicki

Note that CEO Eric Schmidt was not on the call, and likely won’t be in the future (though the company says this was merely a matter of streamlining and that there’s nothing to read into it).

High level thoughts – As we enter 2010, it’s clear that the digital economy is continuing to grow rapidly. We are continuing to invest heavily in people, product, and acquisitions. We’ve already stepped up hiring. We have a strong pipeline of candidate, primarily in Engineer and sales. On Product we continue to push the envelope on two fronts: User experience and Ad Business. Acquisitions: we’ve been very active this year and have a strong M&A pipeline in place.

Wojcicki: Starting about a year about we asked ourselves why search ads had to be text links. In many cases it may be more interesting if we show a video/product in the ad. Search the movie Losers and you may see a video ad. Search Toys R Us and you get promoted site links. CTR on site links up 30-40%. Launched search funnel earlier this year. In display business, on platform side we launched new version of DoubleClick. Our new ad exchange has real-time bidding. As users transition to smartphones with mobile browsers, want to make it easier to extend campaign to those devices.

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