- Revenue: $US15.4 billion versus analyst estimates of $US15.54 billion.
- Adjusted EPS: $US6.27 versus analysts estimates of $US6.44.
- Revenue ex-TAC: $US12.19 billion versus analyst estimates of $US12.25 billion.
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That’s a miss on top and bottom lines, which is why the stock is falling.
Google’s stock is currently down 5%.
During the first quarter, Google’s cost-per-click declined about 9%. Paid click growth increased, but only by 26%. Historically it’s been up about 30% in good quarters.
In other words, the growth in aggregate paid clicks is slowing down.
Here is how the revenues look in a chart:
Highlights from the conference call:
Google CFO Patrick Pichette and Nikesh Arora, chief business officer, are leading the call.
Now here comes the numbers. Consolidated revenue grew 19% year-over-year. Minus currency fluctuations, Google sales would have been up 21%. TAC was 23% of total ad revenue.
Pichette blames extra costs hurting the bottom line on one off items like acquisitions.
Starting in the second quarter, Google will begin disclosing paid clicks and CPC growth by property.
Now Arora’s talking about programmatic technology.
Now he’s talking about Google Play. More than 65 countries can now watch movies through Google Play. Arora also said that Google now has 49,829 full-time employees as of March,up from 47,756 in December.
Highlights from the Q&A section:
Expenses in the quarter involved a lot of legal expenses and mergers and acquistions. Pichette hinted that Google’s $3.2 billion acquisition of Nest affected expenses. Pichette said Nest was “a pretty large transaction” for Google.
Analysts asked about deceleration and Pichette pointed to mobile advertising, which is a growing part of Google’s business but where prices are cheaper.
Mobile pricing needs to be better than desktop pricing, Pichette says. The good news, Pichette says, is that a lot of people are spending time on mobile. Advertisers are starting to see value in providing a great experience on mobile devices. With all the advertisers coming on board, Google is showing that advertising on mobile results in actual transactions.
On why Google’s headcount grew so much this quarter: the acquisition of Nest, DeepMind and other companies had quite an impact on the number of employees.
Google Preferred, which the company will futher detail in about a month, is Google’s way of trying to create a premium concentration of content that brands can advertise against in order to ensure brand safety on YouTube.
In response to a question about the impact of enhanced campaigns, Arora says it’s working. Enhanced Campaigns is Google’s new system for selling ads that lets advertisers launch campaigns for both desktop and mobile.
Analysts keep asking about costs, but Pichetti says Google is very comfortable with its cost structure. The reason why Google’s costs are all over the place is because of the buying and divestiture of Motorola mobility, acquisitions, and other “moonshot” projects like Wi-Fi balloons and driverless cars.
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