The Channel logo

News

By | Neil McAllister 17th July 2015 00:56

Sky still blue, above the ocean: Google still raking it in

Turns out automated small ads is a great way to pile up cash

Gigantic automated advertising machine Google has logged yet another quarter of sound results, showing that if you can get punters in the door to buy magic digital beans without ever having a paid staff member interact with them, you'll do well indeed.

The Mountain View Chocolate Factory reported revenue of $17.73bn for the second quarter of its fiscal 2015, which ended on June 30. That figure just barely missed analysts' estimates, but it was an 11.1 per cent gain over last year's quarter.

Google managed one trick it hasn't pulled off in a while, too: It posted quarterly earnings of $6.99 per diluted share, which actually beat Wall Street's estimates for once. The last time it managed that was over a year and a half ago.

Net income for the quarter was $3.93bn, a 14.9 per cent year-on-year gain.

We'd love to know how much of that came from Google's cloud services business, but unlike Amazon, which started breaking out its Amazon Web Services numbers last quarter, Google doesn't share those figures. Its Cloud Platform revenue is buried in its "Other" reporting segment along with various other items.

It purchased $2.52bn in property and equipment during the second quarter, most of which probably went toward building out data centers. That was 7.3 per cent more than it spent in the year-ago quarter but 14.1 per cent less than it spent last quarter, which is a hard pattern to read. Obviously, Google uses its data centers for far more than just offering cloud services.

The "Other" segment itself doesn't look particularly lively, though. Its revenue of $1.70bn was up a respectable 6.8 per cent from the same period a year ago but down 2.6 per cent from Q1. It was the second sequential quarter in a row in which its revenue declined.

As always, though, wondering how Google's technology business is performing is just a hobby, because the Chocolate Factory really makes its money from advertising. In fact, 90.4 per cent of its revenue came from ads in the second quarter, which was up on both an annual and a sequential basis.

Ad revenue from Google's own sites grew by 13.4 per cent, year-on-year, to $12.40bn. Revenue from its ad network members' sites didn't do quite as well, but it also grew by 5.8 per cent, to $3.62bn.

The fees Google pays to its partners to direct traffic to its sites – its traffic acquisition costs – also grew by 4.5 per cent, which is slightly higher than in recent quarters but nothing much to fret about. It paid out a total of $3.38bn in the quarter.

Meanwhile, the Google gang just keeps getting bigger. The ad-slinger's workforce has grown an impressive 17.6 per cent since this time a year ago, to reach a total headcount of 57,148.

Mind you, not everyone is satisfied with the results. Recently some analysts have grumbled that Google isn't growing its business as rapidly as it once did and they'd like to see it cut its expenses.

For the most part, however, Thursday's report looked pretty good to Wall Street, and investors sent Google's shares soaring up by more than 12 per cent in after-hours trading. ®

comment icon Read 9 comments on this article or post a comment alert Send corrections

Opinion

Baby looks taken aback/shocked/affronted. Photo by Shutterstock

Kat Hall

Plans for 2 million FTTP connections in next four years 'not enough'
Microsoft CEO Satya Nadella
Stranded_ships

Chris Mellor

Thousands of layoffs announced as spinning rust enters its death spiral

Features

Locker room jocks photo via Shutterstock
Best locker-room strategy: Avoid emulating AWS directly
STRASBOURG, JUNE 29, 2016: The seat of the European Parliament. by Marco Aprile for shutterstock. EDITORIAL USE ONLY
Plan b, image via Shutterstock
EU workers, new markets: post-Brexit pressure on May & Co
Tough question, pic via Shutterstock