Google Releases 2nd Quarter Results

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Google Releases 2nd Quarter Results

By: Nathan Weinberg
2007-07-19

Google's earnings for the second quarter are out. The summary: Revenue up 58%, profits down from the previous quarter...

... in every possible way.

Earnings per share was $2.93, missing the consensus estimate of $3.10. Google is growing, but profit margins are shrinking.

Also, AdSense has stopped growing entirely. There was zero growth from last quarter, with AdSense continuing the trend of becoming a less-important part of Google's business. AdSense brought in $1.35 billion, but Google paid out 78.51% of that, keeping a scant $290 million. Within the next year, if Google doesn't find a way to improve AdSense, expect revenue to begin shrinking.

The data:

Revenue: $3.87 billion, up 58% from the second quarter of 2006, up 6% from the first quarter of 2007

GAAP operating: $1.10 billion, 29% of revenues, down from $1.22 billion, or 33% of revenues, in the first quarter of 2007.

Non-GAAP operating income: $1.35 billion, 35% of revenues, down from $1.41 billion, or 38% of revenues, in the first quarter of 2007.

GAAP net income: $925 million, down from $1.0 billion in the first quarter of 2007

Non-GAAP net income: $1.12 billion, down from $1.16 billion in the first quarter of 2007.

GAAP Eearnings Per Share: $2.93, down from $3.18 for the first quarter of 2007

Non-GAAP Eearnings Per Share: $3.56, down from $3.68 in the first quarter of 2007.

Traffic acquisition costs: $1.15 billion, 30% of ad revenues, a decrease from 31% in the first quarter.

Stock based compensation was $242 million, up from $184 million in the first quarter of 2007.

Google-owned sites: $2.49 billion, or 64% of total revenues, a 74% increase over second quarter 2006 revenues of $1.43 billion and a 9% increase over first quarter 2007 revenues of $2.28 billion.

Google AdSense: $1.35 billion, or 35% of total revenues, a 36% increase over revenues of $997 million generated in the second quarter of 2006 and approximately flat with first quarter 2007 revenues of $1.35 billion.

Payments to AdSense publishers: $1.06 billion, or 78.51% of AdSense revenue.

Paid Clicks increased approximately 47% over the second quarter of 2006 and remained approximately the same as the first quarter of 2007.

International Revenues totaled $1.84 billion, representing 48% of total revenues in the second quarter, compared to 42% in the second quarter of 2006 and 47% in the first quarter of 2007.

Operating Expenses: $1.21 billion in the second quarter of 2007, or 31% of revenues, up from $972 million in the first quarter of 2007 or 27% of revenues.

Payroll: $625 million, up from to $506 million in the first quarter of 2007.

Income Taxes: 25.5%

Cash on hand: $12.5 billion.

Employees: 13,786, up from 12,238 in March.

The press release, after the jump: (more)

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Nathan Weinberg writes the popular InsideGoogle blog, offering the latest news and insights about Google and search engines.

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