Google has just announced its second quarter earnings for 2010. Of note, revenue stood at $6.82 billion, which is an increase of 24% year-over-year. But this only represents an increase of 1% over Q1 2010. Google has a history of seeing small growth from Q1 to Q2, however.
More interesting may be that net income actually fell in Q2 versus Q1 of this year. A big reason for that is likely because paid clicks fell by 3% from quarter to quarter. Another factor is that network revenues (those off of Google.com) fell by 1% this quarter compared to last quarter.
Non-GAAP EPS was 6.45, below the consensus estmate of $6.52.
All that said, Google now has $30.1 billion in cash, cash equivalents, and short-term securities — which is up nearly $4 billion from last quarter. Google also has about a thousand more employees now (21,805 full-time) versus what it had a quarter ago.
Below find some live notes from the earnings call:
Patrick Pichette, CFO
- “Overall we are very pleased with Q2 results”
- We noticed that more and more traditional brand advertisers are embracing ways to expand their brands online. Like P&G.
- Campaigns across display, mobile, and search — it’s all being integrated.
- Growth in display was very strong. Display network includes YouTube — it’s growing rapidly.
- We entered into agreement with Omnicom this is significant
- YouTube is seeing impressive growth with regard to ads.
- Very pleased with courts decision to rule in our favor for Viacom case.
- We invested $100 million to win this case.
- Mobile ads continue to grow. And now AdMob is here.
- 160,000 Android devices activated daily — 2 every second.
- The world is moving into the cloud.
- After Q3 we won’t recognize the sales from Nexus One — as we announced, we’re stopping selling them.
- International revenue is 52% of our revenue.
- $3B credit facility
- Capex up as they ramp up data centers
Jonathan Rosenberg, SVP Product Management
- “Now the web is much, much, much more complicated.”
- We introduced Caffeine, a new way of updating our index
- 50% fresher results than before
- And we’ve had a bunch of UI and UX updates.
- “The ads have to get better too.”
- “People would click on fewer ads — that would be bad”
- “You have to make ads that people want to watch.”
- When you search from your phone, you’re much more likely to click if they have a clickable address in them.
- Display is going really well. The ultimate goal is to designate a particular audience on our network.
- And we’re doing remarketing.
- “We want to be open in everything we do.”
- Android is a leading example of being open. Most of these devices are developed independent of Google.
- Android Market now has around 70,000 apps — up from 30,000 in April.
- People spent 4.8 million hours playing Pac-Man on our main site when it was up.
Q: Were bonuses a part of operating expenses?
A: That had a small impact. It was about headcount, marketing and acquisitions.
Q: How much of paid click is coming from mobile?
A: Mobile is growing faster than other clicks. There is a larger range of mobile clicks, but we don’t detail.
Q: Where are the headcount increases coming from?
A: It’s 1,200 new people, but 300 are from M&A. Most of the headcount is in engineering and sales. It’s in the four core areas: search, mobile, apps, display.
Q: CPC mobile vs. desktop.
A: Not really enough data yet to say. It’s really a different beast.
Q: How much investment is going into Android? Is it all just to compete? You’re not charging for it, how do you monetize it?
A: Android cost isn’t material for the company. Some of the key products have not been developed by Google at all — like the Droid X. The entire ecosystem is exploding.
JR: I think the most important thing beyond the growth is that the most popular app is a browser. What do they do there? They search more than they ever have.
Q: Is search activity really strong on mobile devices? What a
A: Android search grew 300% in the first half of 2010. It’s exploding. Mobile has grown 500% in the last 2 years in traffic. Android is an accelerator of that.
Q: How’s the macro environment going?
A: For Google it has been a great quarter. There has been no impact from the larger economy problems. We’re really pleased. Cash breakdown is 50/50 U.S. vs. International.
Q: Returning cash to shareholders?
A: Commercial paper is a great opportunity for us. We have made no decision about share buybacks. It’s a topic that is regularly debated, but nothing to announce.
Q: Android and mobile is a defensive strategy?
A: We did it for offensive reasons, not defensive reasons. We think an open ecosystem is incredible important. And we know that smartphones create a new set of activities for search and transaction. It’s both defensive and offensive.
Q: Android ecosystem support is less than what some would like.
A: We’re investing heavily. Search advertising is nascent in this space. And we’re doing a lot of innovation in cloud computing in other.
A: This is in its nascent stage. “I don’t think of this as defensive at all.”
Q: Profitable on YouTube?
A: We don’t comment on YouTube. But we are incredibly pleased by its trajectory. It’s 2 billion views per day. It’s a billion monetization views a week.
Q: Talk about Android and Chrome OS in terms of revenue. Is there any in the software?
A: It’s too early to answer that. We’re mostly focused on building out the platform with Android. With Chrome, it’s still too early.
A: Contextual search losing market share?
Q: There has been a lot of debate for people’s methodologies. Be cautious about those numbers.
Q: Do you feel you’re losing market share?
Q: Update on China? Are they okay with the new method?
A: The good news is we have our license renewal. Revenue from China is not material from our revenue though. We had decent revenues for Q2 though. I hope you understand why I won’t talk more about it.
Here are all the slides:
Google provides search and advertising services, which together aim to organize and monetize the world’s information. In addition to its dominant search engine, it offers a plethora of online tools and platforms including: Gmail, Maps, YouTube, and Google+, the company’s extension into the social space. Most of its Web-based products are free, funded by Google’s highly integrated online advertising platforms AdWords and AdSense. Google promotes the idea that advertising should be highly targeted and relevant to users thus providing...