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Google Reports Rise in Quarterly Profit as 'Paid Clicks' Grow

Google Reports Rise in Quarterly Profit as 'Paid Clicks' Grow

By Agence France-Presse | Updated: 18 July 2014 11:50 IST

Google reported Thursday that its quarterly profit rose with a jump in revenue and released word that its chief business officer was leaving the company.

High-profile executive Nikesh Aurora took a moment on the earnings call to thank Google for a "phenomenal" 10 years and said he looked forward to "cheering them on from the sideline."

Arora will be replaced in the interim by Omid Kordestani, a business founder who led Google's sales teams.

(Also see: Google Business Chief Nikesh Arora Resigns; Heads to Japan's SoftBank)

Google chief financial officer Patrick Pichette steered talk on the call away from Aurora's career move to a job at Japan's SoftBank, saying he wanted to keep focused on freshly-released quarterly earnings figures.

Paid clicks pop
The California-based Internet titan said its profit jumped during the three months ending June 30, rising six percent from a year ago to $3.42 billion.

Revenue was up 22 percent year on year, at $16.0 billion.

"We are moving forward with great product momentum and are excited to continue providing amazing user experiences, with a view to the long term," Pichette said.

Google shares rose about a percent to $579 in after-market trading that followed release of the earnings figures.

(Also see: Google Wallet for Android and iOS Adds Gift Cards, Money Requests and More)

Google said a key factor in revenue was the jump in "paid clicks," for ads related to searches on Google and its partner sites.

Total paid clicks were up 25 percent from a year ago and two percent from the past quarter, while the average cost per click was down six percent from a year earlier.

Google is the leader in digital advertising with a 31.9 percent share of the global market in 2013, according to the research firm eMarketer. The closest rival was Facebook with 5.8 percent.

According to eMarketer, Google has more than 50 percent of the worldwide mobile ad market.

Google's profit per share was $6.08, about 16 cents below analyst forecasts but revenues were better than the average estimate of $15.6 billion.

(Also see: No, Google Will Not Subsidise Android One Handsets in India)

"It was yet another okay quarter for Google," said Gartner analyst Brian Blau, expressing optimism about the company's long-term prospects.

"I am encouraged by Google's approach to engineering, and how they enable products by building cool tech. They try to keep their users happy."

The global popularity of mobile devices powered by Google-back Android software put the company's money-making services in the hands of growing ranks of users.

Meanwhile, a boom in wearable computers such as smartwatches and Internet-liked eyewear promises to benefit Google over the long haul, the analyst said.

Self-driving cars
While Google makes most of its money from digital advertising, it has been moving into new areas such as home automation, self-driving cars and wearable technology like Google Glass.

Pichette told analysts that Google takes a venture capitalist approach to new projects, calling on teams to hit milestones and make their cases when it comes to being funded.

With projects such as autonomous cars underway in the Google X lab, payoff could be years away, while new software creations could generate faster returns.

Google's Chrome and Android operating systems will be wound more tightly together as the technology titan makes a priority of providing experiences and services that transition smoothly from one screen to another to be in tune with arrays of devices becoming common in people lives.

(Also see: Google Street View Being Used to Detect US Methane Gas Leaks)

"They are basically converging," Pichette said of Android-powered mobile devices and the Chrome operating system for computers that essentially act as gateways to the Internet.

"We have a lot of cross-pollination of teams."

The chief financial officer told analysts that Google has about 60 percent of its cash reserves outside the US and that there was an "interesting case" for keeping it there.

"We do have great opportunities outside the US to invest our cash," Pichette said, noting opportunities for acquisitions, building data centers and expanding offices.

He added that Google has "exciting plans" for its capital in the Asia Pacific and Europe regions.

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