Thursday, October 19, 2006

Google Revenues Spike 92%; What About Payout to Adsense Partners?

With revenue of $2.69 billion, Google -- parent company of Blogger, Adsense and (proposed buyouot candidate) YouTube -- posted a 92 percent quarterly gain in profits and revenue on Oct. 19. A key source of revenue: growth in Adsense Program.

But is Google paying out as much as it's raking in?


Revenue from Adsense gained 54 percent according to a report from Reuters:

Google Network Revenues - Google's partner sites generated revenues, through AdSense programs, of $1.04 billion, or 39% of total revenues, in the third quarter of 2006. This is a 54% increase over network revenues of $675 million generated in the third quarter of 2005 and a 4% increase over second quarter 2006 revenues of $997 million.--quote from Google Press Release


But payments to ad partners did not grow at the same rate:

TAC - Traffic Acquisition Costs, the portion of revenues shared with Google's partners, increased to $825 million in the third quarter of 2006. This compares to TAC of $785 million in the second quarter. TAC as a percentage of advertising revenues decreased to 31% in the third quarter from 32% in the second quarter.
--Google 8K company filing.

Wall Street insights.

Google's growth rate is two to three times faster than its Internet peers: eBay Inc. at 31 percent and Yahoo Inc. at 19 percent and major software rival Microsoft Corp., which has revenues growing at about 10 percent.

"They are stealing share, which was expected for Google versus Yahoo, in paid search," Global Crown Capital analyst Martin Pyykkonen said. "Google's on full throttle." -Reuters report



Links about on Google Earnings
Reuters on Google Earnings
Google Earnings Press Release





Here's the actual news releaser from Google:

MOUNTAIN VIEW, Calif. - October 19, 2006 - Google Inc. (NASDAQ: GOOG) today announced financial results for the quarter ended September 30, 2006.

"Our third quarter results are a testament to the strength of our network of advertisers and partners, as well as our continuing focus on users," said Eric Schmidt, CEO of Google.

"We were particularly pleased with the contributions of our international business in a seasonally weaker quarter. In addition, we continued to forge significant partnerships with companies such as eBay, Fox Interactive Media, and Intuit that will be of great value to all involved."

Q3 Financial Summary

Google reported revenues of $2.69 billion for the quarter ended September 30, 2006, an increase of 70% compared to the third quarter of 2005 and an increase of 10% compared to the second quarter of 2006.


3rd Quarter Financial Highlights

Revenues – Google reported revenues of $2.69 billion for the quarter ended September 30, 2006, representing a 70% increase over third quarter 2005 revenues of $1.58 billion and a 10% increase over second quarter 2006 revenues of $2.46 billion. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs, or TAC.

Google Sites Revenues - Google-owned sites generated revenues of $1.63 billion, or 60% of total revenues, in the third quarter of 2006. This represents an 84% increase over third quarter 2005 revenues of $885 million and a 14% increase over second quarter 2006 revenues of $1.43 billion.

Google Network Revenues - Google's partner sites generated revenues, through AdSense programs, of $1.04 billion, or 39% of total revenues, in the third quarter of 2006. This is a 54% increase over network revenues of $675 million generated in the third quarter of 2005 and a 4% increase over second quarter 2006 revenues of $997 million.

International Revenues - Revenues from outside of the United States contributed 44% of total revenues in the third quarter of 2006, compared to 42% in the second quarter of 2006 and 39% in the third quarter of 2005. Had foreign exchange rates remained constant from the second quarter through the third quarter of 2006, our revenues in the third quarter of 2006 would have been $19 million lower. Had foreign exchange rates remained constant from the third quarter of 2005 through the third quarter of 2006, our revenues in the third quarter of 2006 would have been $35 million lower.

TAC - Traffic Acquisition Costs, the portion of revenues shared with Google's partners, increased to $825 million in the third quarter of 2006. This compares to TAC of $785 million in the second quarter. TAC as a percentage of advertising revenues decreased to 31% in the third quarter from 32% in the second quarter.

The majority of TAC expense is related to amounts ultimately paid to our AdSense partners, which totaled $780 million in the third quarter of 2006. TAC is also related to amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $45 million in the third quarter of 2006.



Net Income – GAAP net income for the third quarter of 2006 was $733 million as compared to $721 million in the second quarter. Non-GAAP net income was $812 million in the third quarter, compared to $772 million in the second quarter. GAAP EPS for the third quarter was $2.36 on 311 million diluted shares outstanding, compared to $2.33 for the second quarter, on 310 million diluted shares outstanding. Non-GAAP EPS for the third quarter was $2.62, compared to $2.49 in the second quarter.

1 comment:

jersey jen said...

yikes! google is on fire!