Google Announces Third Quarter Results, 7% Revenue Growth Year On Year

Google Announces Third Quarter Results, 7% Revenue Growth Year On Year

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Google, leading provider of search and internet technologies has just released their financial information for the third quarter of 2009. Google’s stock, GOOG, is down around 1% on the day thus far, but early data shows a  jump in the stock price right after the release of the financial data.

In the words of Eric Schmidt, Google’s CEO: “Google had a strong quarter–we saw 7% year-over-year revenue growth despite the tough economic conditions. While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future.”

Selected financial highlights include:

  • Revenue of $5.94 billion, a 7% increase YoY
  • International revenue represented 53% of total Google revenue
  • Average cost per click declined 6%
  • Operating income of $2.07 billion, from $1.65 billion in 2008
  • Net income of $1.64 billion, from $1.29 in 2008
  • Google has cash and equivalents of over 22 billion dollars

These are strong numbers, on a year over year basis. Investors that may have been skittish before, perhaps doubting the resiliency of Google in the recession can now relax, Google continues full steam ahead. There is an audio webcast with investors today, at 1:30 PST, or in 15 minutes from the posting of this piece. You can find that here.

Here is a more detailed view of Google’s quarter, as quoted from their press release:

Q3 Financial Summary

Google reported revenues of $5.94 billion for the quarter ended September 30, 2009, an increase of 7% compared to the third quarter of 2008. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the third quarter of 2009, TAC totaled $1.56 billion, or 27% of advertising revenues.

Google reports operating income, operating margin, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.

  • GAAP operating income in the third quarter of 2009 was $2.07 billion, or 35% of revenues. This compares to GAAP operating income of $1.65 billion, or 30% of revenues, in the third quarter of 2008. Non-GAAP operating income in the third quarter of 2009 was $2.39 billion, or 40% of revenues. This compares to non-GAAP operating income of $2.02 billion, or 37% of revenues, in the third quarter of 2008.
  • GAAP net income in the third quarter of 2009 was $1.64 billion, compared to $1.29 billion in the third quarter of 2008. Non-GAAP net income in the third quarter of 2009 was $1.88 billion, compared to $1.56 billion in the third quarter of 2008.
  • GAAP EPS in the third quarter of 2009 was $5.13 on 320 million diluted shares outstanding, compared to $4.06 in the third quarter of 2008 on 318 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2009 was $5.89, compared to $4.92 in the third quarter of 2008.
  • Non-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC) and, in the third quarter of 2008, the settlement agreement with the Authors Guild and the Association of American Publishers (AAP). Non-GAAP net income and non-GAAP EPS exclude the expenses related to SBC and, in the third quarter of 2008, the settlement agreement with the Authors Guild and the AAP, and the related tax benefits. In the third quarter of 2009, the charge related to SBC was $318 million, compared to $280 million in the third quarter of 2008. The tax benefit related to SBC was $73 million in the third quarter of 2009 and $63 million in the third quarter of 2008. In the third quarter of 2008, we recognized $95 million of expense related to the settlement agreement with the Authors Guild and the AAP. The tax benefit related to the settlement agreement was $39 million in the third quarter of 2008. Reconciliations of non-GAAP measures to GAAP operating income, operating margin, net income, and EPS are included at the end of this release.

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