Google’s gross revenue increased a sluggish 11 per cent in the second quarter. But the internet company’s net revenue, which excludes the fees Google pays to partner web sites, still managed to come in ahead of expectations.
Google reported net revenue of $US14.3 billion, above the average analyst expectation of $US14.26 billion, sending the company’s stock up 7.2% to $US622 in extended trading on Thursday.
The secret to Google’s net revenue beat is the continuing declines in the company’s traffic acquisition costs (TAC). Google’s TAC as a per cent of advertising revenue in Q2 was 21.1%, compared to 21.6% in the first quarter of the year and 22.7% during the second quarter of 2014. In fact, Google’s TAC as a per cent of ad revenue is the lowest its been in at least two years.