Google
released its quarterly earnings statement after the market closed, and—unsurprisingly—it's a great one that beats
consensus estimates in most departments. Google beat last year's third quarter by a multiple of six, posting per-share
earnings of $1.32 (net). Total revenue added up to $1.58B before payment of ad commissions; $1.05B after payment of
commissions. GOOG is spiking by nearly 10 percent in after-hours
trading as I write this.
Interestingly, the division of revenue between AdWords on Google-owned sites and syndicated ads on AdSense sites was
almost even: 56 percent for the former and 43 percent in the latter. Now let's see … can we extrapolate the mysterious
percentage Google pays out to AdSense partners with these numbers?
$540M paid in commissions
$679M AdSense gross ($1.58B x .43)
————————————-
79.5 percent revenue share to AdSense partners
(540M / 679M)
Can that be remotely correct? There are probably 15 things wrong with the way I'm going about this. Ideas and
corrections welcomed!
Google Earnings Beat Estimates
Reader Comments
(Page 1)2. WOW, Google went up by a total of 59.10 points if you combine after hours change with today’s change. The stock has been too high for most people to buy a decent amount of shares. If the stock splits there will be a lot of people trying to purchase shares of Google.
Posted at 4:42AM on Dec 19th 2005 by Neil Patel
3. NewsUnleashed/AFP is reporting that Eric Shmidt says, "Our focus on end users and on quality of information and advertising worldwide continues to work extremely well. We are very pleased with how well this is working at scale."
http://newsunleashed.com/google-multiplies-profit-by-seven-as-revenue-surges.html
IMO Google is shifting its focus to ads rather than users. They have significantly decreased their traffic acquisition costs by destroying the relevancy of their search results and by penalizing innocent mom and pop websites.
Seeing how fast GOOG is rising in after hours trading today, I believe another depression is in the making.
Posted at 4:42AM on Dec 19th 2005 by SoftwareEngineer99
4. I think you're getting at the right AdSense rev-share number. However, it's not a secret. Google put it in there annual report. See here:
http://gotads.blogspot.com/2005/03/goog-annual-report-must-re_111229081891402253.html
Also, the six or sevenfold profit increase is deceptive and irrelevent. Look here:
http://gotads.blogspot.com/2005/10/yahoo-vs-google-metrics.html
1. Google Network revenues were actually $675 million
http://investor.google.com/releases/2005Q3.html
And Traffic Aquisition Costs include more than just Google AdSense sites. Google doesn't do proper reporting of Google Network costs and revenues, just to say that TAC is 34% of revenue, down from 36% last quarter.
Whatever the true numbers, it looks like AdSense isn't as profitable as thought, and is in need of more inventory. Google Network revenues are showing 7% growth, dropping every quarter.
Posted at 4:42AM on Dec 19th 2005 by Nathan Weinberg