Google has announced financial results for the quarter ended September 30, 2011. Despite a still struggling economy, the search engine titan exceeded Wall Street's expectations once again.
Google reported net revenues of $7.51 billion, and $9.72 per share, for the quarter. That's a 33 percent increase compared with the third quarter of 2010. Thomson Reuters financial analysts expected revenue to total $7.21 billion and $8.74 earnings per share. Google's total revenue before traffic-acquisition costs totaled $9.72 billion, setting a new quarterly record.
"We had a great quarter," said Larry Page, CEO of Google, in a conference call. "Revenue was up 33 percent year-on-year and our quarterly revenue was just short of $10 billion. Google+ is now open to everyone and we just passed the 40 million user mark. People are flocking into Google+ at an incredible rate, and we are just getting started!"
Mobile Growth
With the Google+ cheerleading, Page may have been mitigating comments Google Engineer Steve Yegge wrote in a blog post. The post, which called Google+ a "pathetic afterthought," was supposed to be private to Google employees, but it accidentally went public.
Google+ may not be driving significant revenue right now, but Page laid out a major growth area in the earnings call. Google's revenue "run rate" in mobile totals $2.5 billion. And that's up a whopping $1.5 billion from about a year ago.
Google reports there are about 190 million Android devices, including 60 million new activations since July. Google is proving the wisdom of its operating system venture, with most of its mobile revenues likely coming from mobile ads.
"Google obviously had a huge quarter and seems to be firing on all fronts. In particular, mobile has gone from a $1 billion annual run rate a year ago to $2.5 billion today," said Greg Sterling, principal analyst at Sterling Market Intelligence. "This represents a huge growth drive and opportunity for Google. And the company is firmly positioned as the No. 1 mobile-ad player globally."
Unlike some people, however, Sterling does not see Google's success as a proxy for the industry as a whole. Google, he argued, is in a unique position given its market dominance.
Google's Hiring Spree
Google-owned sites generated revenues of $6.74 billion, or 69 percent of total revenues, in the third quarter. That is a 39 percent year-over-year increase. Through Google AdSense programs, partner sites generated $2.6 billion, an 18 percent increase. International revenues stacked up to $5.3 billion, or 55 percent of the total.
On the expense side of the equation, operating expenses, other than cost of revenues, were $3.28 billion in the third quarter of 2011, or 34 percent of revenues. That compared with $2.19 billion in the third quarter of 2010, or 30 percent of revenues. On a worldwide basis, Google employs 31,353 full-time employees, up from 28,768 full-time employees as of June 30, 2011.
"Great companies are no greater than the efforts and ingenuity of their people," Page said in the conference call, noting the company would continue hiring if needed. "We will optimize head count for the long term and the opportunities we see."
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