Google's ad-slinging juggernaut gobbles more BEEELLIONS in revenue
With no more Motorola to drag it down, sky's the limit for clicks and banners
Updated Google turned in another impressive earnings report on Thursday, with the giant ad-slinger's revenues reaching record highs both for the fourth quarter and for fiscal 2013.
Total revenues for the three months ending on December 31 were $16.86bn, a 17 per cent hike from the year-ago period. And ignoring the impact of the Motorola Mobility division – which the Chocolate Factory unloaded to Lenovo on Wednesday for a cool $2.91bn – Google's standalone revenue was up 22 per cent since Q4 of 2012, at $15.71bn.
All in all it was a good year for Larry and Sergey's web ads company. Fiscal 2013 saw it bring in a staggering $59.83bn in total revenues across all four quarters, a 19 per cent increase from the previous year.
While both the quarterly and annual revenue figures jibed with what the analysts expected, however, Google's Q4 earnings disappointed slightly at $12.01 per diluted share.
Still, its profits were healthy enough. Net income for the fourth quarter was $3.38bn, up 17 per cent from the year-ago period. Similarly, Google's net income for fiscal 2013 was $12.92bn, a 20 per cent increase from the previous year.
As usual, nearly all of the money flowing into Google came from advertising. Combined ad sales both from Google's own sites and from sites in its various ad networks accounted for $14.07bn or 89.5 per cent of total revenue in Q4.
But the ad business continued to feel some pressure. Paid clicks were up 31 per cent over the fourth quarter of 2012, but the average cost per click – what Google charges advertisers – was down 11 per cent.
Google paid out less of its revenues to its advertising and distribution partners this quarter, however. Its total traffic acquisition costs rose to $3.31bn for the period, but that was just 24 per cent of its advertising revenues, compared to the 25 per cent it shelled out in the year-ago quarter.
And while ads remain its mainstay, what Google calls its "other revenue" – including sales of its technology products and services and fees from its online stores – also continued to show healthy growth. Revenues were up 99 per cent for the quarter, year over year, to $1.65bn.
In a conference call with financial analysts on Thursday, Google chief business officer Nikesh Arora said those gains were driven primarily by sales of apps and content in the Play store, but sales of hardware including the Nexus 5 mobe and the Chromecast were also strong.
Chromebooks continued to do well, too, Arora said, but because most of those are sold by other vendors, Google doesn't book much revenue from them.
The Motorola Mobility division, on the other hand, took another beating. The unit posted an operating loss of $384m for the quarter, which was 153 per cent more than it lost in last year's quarter – but its ongoing woes are Lenovo's problem now.
Meanwhile, the Chocolate Factory shelled out another $2.26bn in capital expenditures in the fourth quarter, which Nadella said went almost exclusively to data center expansion and infrastructure. That was more than twice what it spent in Q4 of 2012, but down slightly from the previous sequential quarter.
"We made great progress across a wide range of product improvements and business goals," CEO Larry Page said in a canned statement, although he was a no-show in the earnings call. He added, "I'm also very excited about improving people's lives even more with continued hard work on our user experiences."
Investors generally seemed pleased with Google's results and sent its share price up 2.6 per cent by the closing bell and up another 4 per cent in after-hours trading. ®
Also during the earnings call, Google CFO Patrick Pichette announced that the company's board has approved a two-for-one stock split, the first in its history. The split, due to take place on April 2, will create a new Class C common stock, one share of which will be distributed for each share of the current Class A stock.
The value of the current stock will be divided between the new Class A and Class C varieties, so each would initially be worth around $568 per share if the split happened today. The Class A shares will keep trading under the "GOOG" ticker symbol, while the new Class C stock will trade as "GOOGL" and will carry no voting power.