April 17th, 2008

Google delivers; Maybe paid clicks weren’t such a big deal

Posted by Larry Dignan @ 2:00 pm

Categories: General, Web Technology, Google, Search

Tags: Revenue, Google Inc., Earnings, Financial Accounting, Operational Accounting, Finance, Larry Dignan

Google on Thursday allayed concerns about its paid click growth rate with first quarter earnings that topped Wall Street’s expectations.

Google reported first quarter net income of $1.31 billion, or $4.12 a share, on revenue of $5.19 billion. Excluding traffic acquisition costs (TAC) of $1.49 billion, revenue was $3.7 billion. Excluding charges Google’s earnings were $1.54 billion, or $4.84 a share. According to Thomson Financial, Google was expected to report first quarter earnings of $4.52 a share on revenue of $3.6 billion.

The search giant’s earnings results (statement and preview) include the operations of DoubleClick, but the company noted that the impact from its latest acquisition was immaterial for revenue and slightly dilutive on earnings.

On a conference call, CEO Eric Schmidt said: “It’s clear to us that we’re well positioned for 2008 and beyond” regardless of the economy. Schmidt said that Google has looked at the economic prospects, but Google isn’t seeing anything worrisome. Get ready for some debate about whether Google is recession proof. Compared to a year ago, Google’s revenue was up 42 percent.

Schmidt added that paid click growth of 4 percent in the first quarter from the fourth quarter was higher than Comscore noted. Paid clicks were up 20 percent from a year ago and 4 percent from the fourth quarter. Comscore had Google’s first quarter paid click growth rate at 1.8 percent.

“We’re showing fewer, but much better ads in each cycle,” said Schmidt. He disputed that there was a dramatic deceleration in paid clicks. Schmidt added that paid clicks are just one factor in a push to improve quality of advertising on Google.

Highlights from the conference call:

By the numbers (revenue figures don’t exclude TAC):