Google 2nd Quarter Earnings in Line with Expectations

The internet giant Google Inc. (NASDAQ: GOOG) has revealed its second quarter earnings. According to its earnings report, the quarter, dating from March though June, saw its revenue rise to $16 billion, which is a 22% jump compared to last year. Its profit swelled by 6%, rising to $3.5 billion in the same period, thanks to impervious demand for its advertising services.

The company also announced that its chief business officer Nikesh Arora, who has been with the company for a decade now, will be leaving for SoftBank. His position will be filled by Google’s business founder, who formerly led the company’s sales team, Omid Kordestani.

Meanwhile, the stock market responded positively to the Google’s earning report, with its share price closing 1% higher.

Earning Report Breakdown

Revenues

Searches and the subsequent clicks on ads on Google search engine and partner sites continued to be the major source of revenues for the company. The number of paid clicks was 2% higher than in the first quarter, and 25% higher than the same period last year. The number of paid clicks on its own sites, such as the Google search engine, YouTube and Blogger, rose by 33%, while those of its partner sites increased by merely 9%.

However, these adverts continued to become cheaper, registering a 6% decrease from the same period in 2013, and remained stable from the first quarter of 2014.

Google now makes much of its revenue from its own website. $10.94 billion (69% of its total revenue) collected in the quarter was basically from traffic to its website. This figure is 23% higher compared to last year, and is enamours compared to the 7% increase in network revenues from partner sites. These sites delivered $3.2 billion into the search engine’s coffers.

Traffic Acquisition

Google is known to pay companies for placing its ads on their sites. It also pays web browsers for placing the search engine on their search bars. These costs make up the traffic acquisition costs and it increased by about $28 million from last year’s $3.01 billion.

The Company’s Future Prospects

Google’s growth is astounding. Ten years ago no one would have believed that Google would be this big. Then it posted revenues worth $3.2 billion, and now it is almost 20 times as large. Its sales have shown enormous growth with an average of about 40% annually. Yet, this growth has not come easy.

The company, which begun as a search engine tool and focused on ads for revenues, has now diversified its portfolio and is now a key player in the Smartphone market. Thanks to its strong financial muscle, the company is able to invest in different areas that would otherwise flex its position.

Many people believe that Google many not continue to grow at its current pace. However, this has been said for a while now, but the company shows no sign of aging growth. Its near monopoly in the search industry is one of it greatest strengths.  Its Android platform, which it may soon monetize, the budding wearable market, and introduction of its operating system to household appliances and automotives will play a huge role in its growth and development in the future. Other areas that investors should also pay keen attention to include its Google Glass and high-speed fibre optic robotics projects.