google results unpacked – insights into digital advertising market

Posted on October 18, 2010

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google just exceeded market expectations, delivering $5.5 Billion vs $5.23 expected.  while search is still the key component delivering 90% of revenues and 95% of profits, non “tradition” web search revenues are growing. interesting to note that turnover was $6.77B, so around $1.2 billion is traffic acquisition costs.

profit was $1.92B vs $1.4B last qtr. so net margin is a very healthy 34.5%. this is for GAAP accounted profits (non GAAP its even higher

1. own site revenues up 20% to $4.44

2. adnetwork revenues up 24% to $2B

net cash increased by $2.5B to $33B – thats quiet a war chest!

key growth areas:

1. Mobile – delivering $1Billion search advertising this qtr from mobile search, a 5x increase

2. Youtube – 40% of videos now have ads

3. display – $2.5B (annualised) in display

4. android – users search more than average, 90 000 apps available. focus on making money for app developers and driving search volumes rather than making money from app store.

 

 

 

2010 Financial Tables

Full year financial tables with quarterly data.

Income Statement Information

(In millions, except share amounts which are reflected in thousands and per share amounts)

Full Year 2010
(unaudited)

Revenues

2007 2008 2009 Q1 Q2 Q3
Revenues 16,594 21,796 23,651 6,775 6,820 7,286
Y/Y Growth Rate 56% 31% 9% 23% 24% 23%
Q/Q Growth Rate NA NA NA 2% 1% 7%
Google Web Sites 10,625 14,414 15,723 4,439 4,499 4,833
Y/Y Growth Rate 68% 36% 9% 20% 23% 22%
Q/Q Growth Rate NA NA NA 0% 1% 7%
Google Network Web Sites 5,788 6,715 7,166 2,036 2,063 2,199
Y/Y Growth Rate 39% 16% 7% 24% 23% 22%
Q/Q Growth Rate NA NA NA 0% 1% 7%
Total Advertising Revenues 16,413 21,129 22,889 6,475 6,562 7,032
Y/Y Growth Rate 56% 29% 8% 21% 23% 22%
Q/Q Growth Rate NA NA NA 0% 1% 7%
Other Revenues 181 667 762 300 258 254
Y/Y Growth Rate 61% 268% 14% 68% 39% 35%
Q/Q Growth Rate NA NA NA 43% -13% -2%
As % of Revenues
Google Web Sites 64% 66% 67% 66% 66% 67%
Google Network Web Sites 35% 31% 30% 30% 30% 30%
Other Revenues 1% 3% 3% 4% 4% 3%
Full Year 2010
(unaudited)

Costs

2007 2008 2009 Q1 Q2 Q3
Cost of Revenues* 6,649 8,622 8,844 2,452 2,467 2,552
As % of Revenues 40% 40% 37% 36% 36% 35%
Traffic Acquisition Costs 4,934 5,939 6,169 1,711 1,732 1,805
As % of Revenues 30% 28% 26% 25% 25% 25%
Other Cost of Revenues* 1,715 2,683 2,675 741 735 747
As % of Revenues 10% 12% 11% 11% 11% 10%
Research & Development* 2,120 2,793 2,843 818 898 994
As % of Revenues 13% 13% 12% 12% 13% 14%
Sales & Marketing* 1,461 1,946 1,984 607 629 661
As % of Revenues 9% 9% 8% 9% 9% 9%
General & Administrative* 1,280 1,803 1,668 410 461 532
As % of Revenues 8% 8% 7% 6% 7% 7%
Total Costs & Expenses* 11,510 15,164 15,339 4,287 4,455 4,739
Y/Y Growth Rate 63% 32% 1% 18% 22% 22%
Q/Q Growth Rate NA NA NA 2% 4% 6%
Full Year 2010
(unaudited)

Profitability

2007 2008 2009 Q1 Q2 Q3
Income from Operations 5,084 6,632 8,312 2,488 2,365 2,547
As % of Revenues 31% 30% 35% 37% 35% 35%
Impairment of Equity Investments NA (1,095) NA NA NA NA
As % of Revenues NA -5% NA NA NA NA
Net Income 4,204 4,227 6,520 1,955 1,840 2,167
As % of Revenues 25% 19% 28% 29% 27% 30%
EPS
Basic $       13.53 $       13.46 $       20.62 $         6.15 $ 5.78 $ 6.80
Diluted $       13.29 $       13.31 $       20.41 $         6.06 $ 5.71 $ 6.72
Number of Shares
Basic 310,806 313,959 316,221 317,895 318,350 318,617
Diluted 316,210 317,514 319,416 322,608 322,486 322,377

Balance Sheet & Cash Flow Statement Information

(In millions, except DSO)

Full Year 2010
(unaudited)
2007 2008 2009 Q1 Q2 Q3
Cash, Cash Equivalents &
Marketable Securities
14,219 15,846 24,485 26,514 30,059 33,380
Accounts Receivable, Net of Allowance 2,163 2,642 3,178 3,084 3,308 3,616
DSO (in days, using ending AR) 48 44 49 41 44 46
Property and Equipment, net 4,039 5,234 4,845 4,773 4,920 5,506
Total Assets 25,336 31,768 40,497 42,871 48,045 53,342
Cash Flow from Operations 5,775 7,853 9,316 2,584 2,085 2,886
Capital Expenditures 2,403 2,358 810 239 476 757

Supplemental Information

(In millions, except headcount data)

Full Year 2010
(unaudited)
2007 2008 2009 Q1 Q2 Q3
Stock-Based Compensation Expense 869 1,120 1,164 291 309 380
International Revenues as % of Total Revenues 48% 51% 53% 53% 52% 52%
Ending Permanent Headcount 16,805 20,222 19,835 20,621 21,805 23,331
Sequential Headcount Growth Rate 57% 20% -2% 4% 6% 7%

 

 

 

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