Google grows revenue, profit in Q3

The company believes the economy is on its way back from the downturn

Google grew both its revenue and profit in the third quarter, which ended Sept. 30, registering results its CEO called "strong" and that exceeded Wall Street expectations.

The company now considers the worst of the recession to be over so it has decided to step up its investments in areas like hiring and acquisitions.

"We're very optimistic about the future. We now have the business confidence to invest heavily in the next phase of innovation," Google CEO Eric Schmidt said during a conference call to discuss the financial results.

"We're open for business, making strategic acquisitions both large and small," he added.

Google had revenue of US$5.94 billion, up 7 percent compared with 2008's third quarter, the company said Thursday. Of that total, it paid out $1.56 billion, or 27 percent, as commissions to its advertising partners and, to a lesser extent, as fees to other partners. Thus, net revenue was $4.38 billion.

Net income came in at $1.64 billion, or $5.13 per share, up from $1.29 billion, or $4.06 per share, in 2008's third quarter.

On a pro forma basis, which excludes certain items, net income was $1.88 billion, or $5.89 per share, compared to $1.56 billion, or $4.92 per share.

The consensus estimate from financial analysts was for earnings per share on a pro forma basis of $5.42 and net revenue, deducting commissions, of $4.24 billion.

"We're very pleased with our Q3 results," said Google CFO Patrick Pichette. "Our business was strong across the board."

"We saw stabilization or improvement in most of our major markets," Pichette added.

Paid clicks on ads served on Google sites and on partner sites increased 14 percent, while the average cost-per-click fell 6 percent, Google said.

The company ended the quarter with cash, cash equivalents and short-term marketable securities totalling $22 billion, and with a global staff of 19,665 full-time employees, slightly down from the second quarter.

Google generated 53 percent of its revenue from international markets, up from 51 percent in 2008's third quarter.

Schmidt didn't provide much detail on what companies Google might be looking to acquire, saying that the most frequent types of companies it buys, at a rate of about once a month, are small ones, relatively inexpensive and with a specific technology it's interested in.

Along those lines, Google would be interested in companies that could help it fill in gaps in the development of products like its Chrome OS, its display advertising technology and specific types of search services, he said.

"We're certainly looking for larger businesses to buy but in those cases it would have to be some significant strategic rationale, some acceleration for revenue, some major, major user base we don’t have access to," Schmidt said, adding that those bigger acquisitions will be more infrequent.

While Google mulls making more acquisitions, it will also continue to invest in internal development. Jonathan Rosenberg, Google's senior vice president of product management, singled out a new AdWords user interface for advertisers as one of the company's biggest investments of the year so far. Virtually all advertisers have been transferred over to the new user interface, which represents the biggest overhaul of the AdWords system ever, he said.

Google is also investing heavily in developing new ad formats, including a new one being tested for local ads, designed to make it easy for small businesses to sign up by filling out a one-page form and paying a monthly rate, Rosenberg said. That beta local ad service also includes a Web page for businesses that don't have one, populated with their information.

Another area of major investment this year has been the improvement of search user experience through the development of new features to help users refine queries and filter search results, he said.

"We see users today coming to us with much harder queries than they used to, so we're adding more ways for them to work with the results and get what they need," Rosenberg said.

Schmidt also addressed this topic, saying Google had implemented about 120 search quality improvements during the third quarter, and will continue to constantly improve its search technology now and in the future.

"We want to get to the perfect search engine," Schmidt said.

Join the PC World newsletter!

Error: Please check your email address.

Tags Google

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Juan Carlos Perez

IDG News Service
Show Comments

Essentials

Microsoft L5V-00027 Sculpt Ergonomic Keyboard Desktop

Learn more >

Lexar® JumpDrive® S57 USB 3.0 flash drive

Learn more >

Mobile

Lexar® JumpDrive® S45 USB 3.0 flash drive 

Learn more >

Exec

Lexar® JumpDrive® C20c USB Type-C flash drive 

Learn more >

Lexar® Professional 1800x microSDHC™/microSDXC™ UHS-II cards 

Learn more >

HD Pan/Tilt Wi-Fi Camera with Night Vision NC450

Learn more >

Audio-Technica ATH-ANC70 Noise Cancelling Headphones

Learn more >

Budget

Back To Business Guide

Click for more ›

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?