Google's revenue (almost) doubles
Published: 21 Oct 2005 11:00 BST
Google saw its third-quarter revenue nearly double from a year ago and profit rise in what usually is a slow Web surfing period.
The Internet bellwether on Thursday posted a net income of $381.2m (£215.8m), or $1.32 a share, on record revenue of $1.58bn, up 96 percent from a year earlier on strong global advertising.
A year ago, the company posted earnings of 19 cents a share and revenue of $805.9m, Google said.
Excluding $530m in traffic acquisition costs, the portion of revenue shared with partners, Google posted revenue of $1.05 billion.
"We had another strong record-breaking quarter in terms of both revenues and profits. We're very, very pleased," Google chief executive Eric Schmidt said in a conference call with analysts. "This is traditionally a slow season for Internet properties so this momentum shows that, at least from my perspective, we are effectively connecting with our users and our customers."
After the announcement, Google's stock shot up about 10 percent to $335.50 in after-hours trading, from a closing price of $303.20.
Google's earnings would have been $1.51 per share if not for charges related to employee stock options and research and development. That handily beat analyst expectations, on average, of $1.36 per share and revenue of $944.4 million, excluding traffic acquisition costs.
David Edwards, an analyst at American Technology Research, said Google's results exceeded his estimates.
"They made a lot of money," he said. "Clearly they showed a lot of strength [selling ads] on their own core sites. Google site revenue was up 20 percent sequentially."
Google said it generated $885m, or 56 percent of total revenue, from ads on its own Web sites, compared with $675m, or 43 percent of total revenue, that was generated from partner sites through its AdSense programme.
Nearly all of Google's revenue comes from advertisements that appear on search result pages and on partner sites. The company accounts for about 45 percent of all US Internet searches, compared with 23 percent for Yahoo and 12 percent for Microsoft's MSN, according to Nielsen/NetRatings.
Google declined to give forward guidance, although chief financial officer George Reyes said the company has forecast that capital expenditures for 2005 will be more than $800m. The company has been spending money on acquiring additional land, office space, production servers and networking equipment, he said, adding that Google hired about 800 people in the third quarter and has nearly 5,000 full-time employees.
Google executives, typically very secretive about strategy, declined to discuss planned products or services, but mentioned several times how important Internet access is to their business, a possible indication of their future direction. Observers have tried to piece together reports of Google buying up unused fibre optic cabling and its investment in a provider of broadband over power-line technology, among other moves.
"Internet access is becoming so ubiquitous, so practical; our lives are continuing to move online and change the way we live and do business," Schmidt said. "We believe that the most direct way to access the world's information is, and will continue to be, through Google."
Google's results were "driven by a business model for instant and seamless access to the world's information," he added.
In response to a question about Google's motivations for bidding to offer free wireless Internet access to the city of San Francisco, company co-founder Larry Page said: "We are excited about expanding Internet access in general. We think it's really good for our business... So the San Francisco Wi-Fi is an experiment to see how we can provide new services [and] localised software in environments where people have good access to the Internet."
Google has beaten analyst estimates in the three quarters since going public last year. Meanwhile, its share price has skyrocketed, rising nearly 60 percent since the beginning of the year and reaching a high of $321.28 on Oct. 4.
The company raised more than $4bn in a September stock sale, bringing its cash total to about $7bn.
On Tuesday, Google's chief rival, Yahoo, posted higher third-quarter profit and revenue from a year ago and beat analyst expectations.
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