After the Market closed today Google announced its financial results for the quarter ended March 31, 2011:
The highlights:
“Google reported revenues of $8.58 billion for the quarter ended March 31, 2011, an increase of 27% compared to the first quarter of 2010.”
“Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the first quarter of 2011, TAC totaled $2.04 billion, or 25% of advertising revenues.”
Revenues – Google reported revenues of $8.58 billion in the first quarter of 2011, representing a 27% increase over first quarter 2010 revenues of $6.77 billion.
Google Sites Revenues – Google-owned sites generated revenues of $5.88 billion, or 69% of total revenues, in the first quarter of 2011. This represents a 32% increase over first quarter 2010 revenues of $4.44 billion.
Google Network Revenues – Google’s partner sites generated revenues, through AdSense programs, of $2.43 billion, or 28% of total revenues, in the first quarter of 2011. This represents a 19% increase from first quarter 2010 network revenues of $2.04 billion.
International Revenues – Revenues from outside of the United States totaled $4.57 billion, representing 53% of total revenues in the first quarter of 2011, compared to 52% in the fourth quarter of 2010 and 53% in the first quarter of 2010.
Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 18% over the first quarter of 2010 and increased approximately 4% over the fourth quarter of 2010.
Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 8% over the first quarter of 2010 and decreased approximately 1% over the fourth quarter of 2010.
TAC – Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, increased to $2.04 billion in the first quarter of 2011, compared to TAC of $1.71 billion in the first quarter of 2010. TAC as a percentage of advertising revenues was 25% in the first quarter of 2011, compared to 26% in the first quarter of 2010.
The majority of TAC is related to amounts ultimately paid to our AdSense partners, which totaled $1.70 billion in the first quarter of 2011. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $337 million in the first quarter of 2011.
Other Cost of Revenues – Other cost of revenues, which is comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs as well as credit card processing charges, increased to $897 million, or 10% of revenues, in the first quarter of 2011, compared to $741 million, or 11% of revenues, in the first quarter of 2010.
Operating Expenses – Operating expenses, other than cost of revenues, were $2.84 billion in the first quarter of 2011, or 33% of revenues, compared to $1.84 billion in the first quarter of 2010, or 27% of revenues.
Operating Income – GAAP operating income in the first quarter of 2011 was $2.80 billion, or 33% of revenues. This compares to GAAP operating income of $2.49 billion, or 37% of revenues, in the first quarter of 2010. Non-GAAP operating income in the first quarter of 2011 was $3.23 billion, or 38% of revenues. This compares to non-GAAP operating income of $2.78 billion, or 41% of revenues, in the first quarter of 2010.
Interest and Other Income, Net – Interest and other income, net increased to $96 million in the first quarter of 2011, compared to $18 million in the first quarter of 2010.
Income Taxes – Our effective tax rate was 21% for the first quarter of 2011.
Net Income – GAAP net income in the first quarter of 2011 was $2.30 billion, compared to $1.96 billion in the first quarter of 2010. Non-GAAP net income in the first quarter of 2011was $2.64 billion, compared to $2.18 billion in the first quarter of 2010. GAAP EPS in the first quarter of 2011 was $7.04 on 326 million diluted shares outstanding, compared to $6.06 in the first quarter of 2010 on 323 million diluted shares outstanding. Non-GAAP EPS in the first quarter of 2011 was $8.08, compared to $6.76 in the first quarter of 2010.
Cash Flow and Capital Expenditures – Net cash provided by operating activities in the first quarter of 2011 totaled $3.17 billion, compared to $2.58 billion in the first quarter of 2010. In the first quarter of 2011, capital expenditures were $890 million, the majority of which was related to IT infrastructure investments, including data centers, servers, and networking equipment. Free cash flow, an alternative non-GAAP measure of liquidity, is defined as net cash provided by operating activities less capital expenditures. In the first quarter of 2011, free cash flow was $2.28 billion.
Cash – As of March 31, 2011, cash, cash equivalents, and marketable securities were $36.7 billion.
Headcount – On a worldwide basis, Google employed 26,316 full-time employees as of March 31, 2011, up from 24,400 full-time employees as of December 31, 2010.
“We had a great quarter with 27% year-over-year revenue growth,” said Patrick Pichette, CFO of Google. “These results demonstrate the value of search and search ads to our users and customers, as well as the extraordinary potential of areas like display and mobile. It’s clear that our past investments have been crucial to our success today–which is why we continue to invest for the long term.”
Nice to see Google doing so well.
However this just marks another quarter where Google has increased its earnings, paid clicks and cost per click and domainers incomes continue to decline.
How Google can keep increasing their revenue, cost per click, number of click quarter after quarter, telling their advertisers that domain name traffic is the best converting traffic while domain holders incomes continue to decline is a certainly logically inconsistent at best.
The market apparently did not like the news as shares of Google are down about $28 a share or 5% in aftermarket trading at $548.00
Domain investors can’t unite and that’s why they are getting a shaft.
Isn’t it time for a class action from domainers yet?
I have a site with over five thousand visitors a month but the Adsense payouts per click are so bad I have considered removing Adsense from that site altogether with the hope that advertisers might eventually contact me directly.
Looks like Goog vs. Gold is not working out so well. The barborous relic will continue to outperform as long as Bernanke keeps the printing press going 24/7
How about Yahoo vs. Silver LOL
Congratulations to Google. Facebook is also going up.
I wonder how much better the economy would be if they closed some of the loopholes on these corporate giants?
“Double Irish” “Dutch Sandwich” …..and the “Bermuda Triangle” 😉
“Google, the owner of the world’s most popular search engine, uses a strategy that has gained favor among such companies as Facebook Inc. and Microsoft Corp. The method takes advantage of Irish tax law to legally shuttle profits into and out of subsidiaries there, largely escaping the country’s 12.5 percent income tax.”
bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html
….Its quiet an interesting read considering the current financial problems.
“TAC as a percentage of advertising revenues was 25% in the first quarter of 2011, compared to 26% in the first quarter of 2010.”
Shouldn’t TAC percentage paid to Adsense partners stay the same? Looks like we got a 1% pay cut, which is actually a 4% reduction. (1 is 4% of 26). Actually if CPC is up “8%” and TAC was reduced by 4%, we got a serious reduction in
2010:
$100 CPC revenue for Google
26% TAC to Adsense Partner equals $26 to us
2011 8% revenue increase:
$108 CPC revenue for Google
26% TAC to Adsense Partners equals $28.08 (should have been paid)
25% TAC to Adsense Partner paid in 2011 equals $27 (was paid)
So we get watered down as revenue goes up. With partners like that, who needs competitors. Glad we are investing in a better user experience so we can get less of the pie.
“So we get watered down as revenue goes up. With partners like that, who needs competitors.”
Yep, they’ll just keep on squeezing what they can from wherever they can.
Capitalism at its finest.
Some domain developers say they do well with adsense.
But, I doubt them.
And, then I wonder how happy they would be
if they received a fair share of the adsense revenue.
As questionable as I am of the affiliate companies, I prefer
affiliate programs over adsense.
Logically, having direct advertisers is the best route.
As for ppc, we all feel we are being cheated. What about the
ppc companies? Do they feel cheated? (DS, Fab, Namedrive)
Naturally, they are not going to say anything publically.
The parking companies are cheating you to.
Google just keeps going……..
despite its centralised design, the internet is very centalised in some respects. traffic being one.
only a handful of sites receive the bulk of the ‘net’s traffic.
unsavvy advertisers can only see a few sites as being relevant: the ones with massive traffic.
more savvy advertisers go a step further and put their annoying ads on myriad sites. they will use whatever means available, from javascript to stealth malware. those are your top ppc spenders and all the parasites in their ecosystems.
but most companies are not that serious about web advertisting, and they will not go to such lengths. they’re more apt to just pay for seo.
in reality, for many of these less serious advertisers, the shotgun approach (being linked to many sites and capturing type-ins) would work better for them than the rifle approach (being linked only search engine traffic)… but only google, the parking companies and domainers know that.
so these advertisers will continue to go to google or facebook to advertise. they will continue to only focus on the sites with massive traffic. quantity not quality.
and so parking companies and their clients, domainers, will only have only one or very few hands feeding them.
c’mon google, throw us a bone!
Buy GOOG shares…they are at a great discounted price right now…under $550.
Buy AAPL shares…they are under $335 right now…great bargain!
Sell under a month or two for huge gains!
Easy Money!
Good Luck!
** domain name traffic is the best converting traffic **
LOL
What Google DIDN’T say was:
‘domain traffic is the best converting traffic – for typo domains & “confusion traffic”.’
If it really was that lucrative Google would have bought out portfolios years ago.
I trust they have more business sense than the average domainer.
And what exactly does “convert” mean?
How would Google know?
Ya mean advertisers actually go back to Google & tells them they had x number of purchases…or x signups…or whatever action…? LOL
How many of ya have been on the other side, as ADVERTISERS
Not many – thought so.
If you had – you’d be immediately checking the “do not want traffic from domains” option…
Domain traffic from parked pages is mostly pure junk – often totally unrelated to the domain keywords. And/or fraud clicks.
Tons of supposed clicks from .INFO, .MOBI etc, and other “available yesterday” domains (that even the proverbial infinite # of monkey given infinite time would not “type in” by chance), registered by someone…bleeding advertisers dry until they wake up to the fact..
Funny – domainers really though PPC rates were really going to “da moon” back in the go-go years..
Pathetic is that they still haven’t twigged on that that period was an anomaly, a brief moment in time that will never again come back.
If domainers don’t like it they can vote with their feet.
It’s called capitalism at its best.
Oh – they can’t.
All they can do is b1tch & wail.
Put up & show us – with all the domainer soundbites “own the category killer, earn millions”, “corporate America doesn’t get it” (they are doing fine).
Well, whoop-de-do, with all the category killer domains owned by domainers, put your money where your mouth is, develop even ONE domain & show ’em (Google) how it’s done. Build that advertising network.
Funny – I see no takers. Only more whiners.
Tick tock…
all those monkeys tapping their keyboards are not under our direct observation, and they’re still to a large extent unpredictable, or we might know what they will do but can’t figure out their intent. people have been typing in bizarre non-existant domain names since the _80’s_ when the domain name system first went into use. to my knowledge this has not slowed. there’s been no attempt to stop it. that’s a long time. i don’t see this phenomenon coming to an end. and we still don’t really know why people do it. but does it matter? consider that since that time many people have built significant wealth due to this phenomenon with only a minimal understand of user behviour. the registries have done very well for themselves.
google has a lot of data about user behaviour. much more than anyone else. it’s still not enough to answer all our questions. but it’s more than anyone else has got. that is a big advantage.
bill gates was quoted by the nytimes last year as saying google’s monopoly is fueled in part by a positive feedback loop. the more data they get from users, the more likely they are to succeed in designing new ways to get yet more user data. and so they just keep getting more user data. and their monopoly just gets stronger.
when i listen to the goog conf calls, the analysts sound pretty clueless to me. at least, they rarely ask hard questions. but that’s how it is when a company gets really fat. it’s like everyone’s in a stupor, and only thinking about money.
as someone above said, google just keeps going. amazing.
This is how Google plays with taxes.
A bit on modern financial engineering: http://brief.ly/2ww/cnet/
The share price went down, because the report revealed numbers lower than previously unticipated.
“If it really was that lucrative Google would have bought out portfolios years ago”
Why buy the cow when you get the milk for free?
Google is an already too big monopoly
Aggro
Regarding your statement on Google:
“”And what exactly does “convert” mean?”
How would Google know?””
Well isn’t that what Smart Pricing is all about?
Google SAYS they track the quality of the traffic and CAN figure out which traffic is better than others and then devalues the traffic that does not convert as well.
That is why that suit I wrote about last week labeled “story of the year” is so important
“Funny – I see no takers. Only more whiners.”
If it wasn’t for the whiners we’d all still be living in caves, the whiners help spur the people with the most brains to figure out a better solution to any given problem.
If it wasn’t for the whiners the world would be perfect already and there would’nt be anything else left to do or say, apart from stand around and go …Bahhhhhh
If there wasn’t any whiners I’d really miss your inspirational posts Aggro…keep up the good work 🙂 (< nuthug just for you )
If I ever grow enough brain cells to build an advertising network I promise to name it after to you.
Aggroi ™ – Advertising gives great returns on investment
…lookout Google, you days are numbered 😉
i don’t think there are any large public us companies in existence that don’t “play with taxes”. it’s what their advisors tell them to do. if the advisors didn’t tell them to use these strategies, then they wouldn’t be viewed as competent advisors. moreover, minimising taxes benefits shareholders.
some countries that do not have flat tax rates have very complex tax laws and _encourage_ their people to incorporate to minimise taxes, to the extent they can afford to do so, within the law. what is the downstream effect of that?
as the complexity of a law increases so too does the likelihood of finding ambuiguities and “loopholes”. so there’s an incentive created (where if you exert enough effort picking the law apart, you might be able to pay less taxes) as well as an opportunity (for tax advisors to make money by developing strategies and selling advice). it stands to reason that the largest public companies will hire the best advisors they can afford, who will do their best to reduce their client’s tax burdern to as near zero as possible (hopefully staying squarely within the law). this shouldn’t really be surprising to anyone.
there is a book that’s just been published on offshore tax havens. (no, it’s not some “how to” guide aimed at tax dodgers. it’s more like a pseudo-scholarly treatment of the subject.) i haven’t read it, but based on his comments, the author seems to have reached the conclusion that the strategies of minimising or evading taxes of one jurisdiction by moving income into or through other jusrisdictions (who are usually quite happy to receive the funds) have been in practice so long, and are used to move such a large portion of the world’s wealth year after year, that dismantling this system would probably leave us all worse off. perhaps the more this author learned about the path that money takes, from country t country, and all the people it touches along the way, the more it got him thinking and questioning his assumptions.