Google Misses On EPS Of $6.88, Revenue Of $14.5B For Q4 2014

Google reported its third-quarter earnings after close of market today, offering up gross revenue of $18.10 billion, revenue net of traffic acquisition costs (ex-TAC) of $14.5 billion, and non-GAAP earnings per share (EPS) of $6.88, with GAAP EPS of $6.91.

Wall Street watchers had anticipated $7.13 non-GAAP EPS, with revenue of $14.8 billion. One of the key metrics to watch this quarter was revenue growth, since last quarter’s results saw it fall below 20 percent year-over-year positive growth for the first time in the past five years. Google’s ex-TAC revenue in this instance represents just 7 percent growth compared to the same period last year, which will likely worry investors.

Google reported that its average cost-per-click was down 8 percent during the quarter, as compared to the year-ago period, but the aggregate total of paid clicks went up by 14 percent.

Another key area of importance with this earnings report is overall expenses – Google saw its operating budget take up a bigger portion of profits during Q3 2014 than in the year ago period, owing in part to a big uptick in headcount. This quarter, operating expense were $6.78 billion, up from $5.03 billion last year.

Google basically continues to try to mature other businesses to differentiate its revenue away from the hulking monolith that is its advertising department. This past quarter, it made big investments and product changes in YouTube, for instance, which could help widen the margins in that business down the road.

This also ends Google’s fiscal year, which saw revenues at $66 billion, with basic EPS of 20.61, compared to $55.5 billion and $210.95 annual EPS for 2013.