Google (GOOGL) reported a sharp increase in revenue thanks to growing advertising dollars, but the tech giant’s bottom line missed expectations amid heavy spending on new businesses.
Continue Reading Below
Google said Thursday it earned $3.42 billion, or $4.99 a share, up 5.9% over the year-ago period’s $3.23 billion, or $4.77 a share. Excluding one-time items, adjusted earnings checked in at $6.08 a share.
Revenue jumped 22% to $15.96 billion. The sales numbers exclude Motorola Mobility, which Google agreed to sell to Lenovo Group.
Analysts were looking for Google to post an adjusted profit of $6.24 a share and revenue of $15.62.
Although mobile devices and video have helped boost ad clicks, the amount Google gets paid per click has been on the decline. Mobile ads typically cost less than those that appear on websites accessed using PCs.
In the latest period, Mountain View, Calif.-based Google said prices paid for each ad click declined 6% year-over-year. The total number of clicks on ads placed next to Google search results were up 25%.
Continue Reading Below
Revenue from Google websites, including search advertising, rose 23% to $10.94 billion. Google booked $3.42 billion in revenue from its network business, which includes display advertising. That reflects a 7% improvement compared to the same period last year.
Earlier this week, rival Yahoo (YHOO) said revenue from display ads, excluding traffic acquisition costs, fell 6.9% in the second quarter.
Google’s traffic acquisition costs, or the portion of revenue Google shares with its partners, increased to $3.29 billion, or 23% of revenue, versus last year’s $3.01 billion, or 25% of revenue.
Operating expenses climbed to $5.58 billion from $4.45 billion in the year-ago quarter. Google recorded $2.65 billion in capital expenditures, most of which covered data-center construction, real estate purchases and production equipment.
The company said its workforce includes a total of 52,069 employees, up from 49,829 as of March 31.
Google said it will “continue to make significant capital expenditures,” as the search behemoth looks to bolster its footprint in mobile and social.
Also on Thursday, Google announced that chief business officer Nikesh Arora is leaving the company to join Japan's Softbank.
Class-A shares of Google were trading 1.4% higher at $589.10 in after-hours trading.