Google’s first quarter earnings fall short despite revenue growth

Google’s first quarter earnings fall short despite revenue growth
Ad revenue is the cash cow for Google, but ad prices are being forced downward as they penetrate deeper into the smartphone and tablet space. With that, Google’s revenues were up, but missed targets by a few hundred million dollars here and there.

For the first quarter, Google grossed $15.4 billion with net revenues of $12.19 billion. Those figures include activity with Motorola. The industry analysts were expecting revenue of $15.6 billion and income of $12.3 billion.

With such large figures, the few hundred million seems like it is within the margin of error, but underneath there is concern about the value of the ever present “ad click,” the source of most of Google’s income stream.

The actual number of clicks on ads is going up, 26% over a year ago, but the cost-per-click in the first quarter fell by 9% on top of the previous quarter’s 11% dip. This driven by the wider exposure of ads in mobile as well as the wider net of ads spread across YouTube. The increased volume and dip in cost-per-click revenue is not a surprise, but the concerns then turn to where Google can make up for it.

There is apparently not a lot of confidence at the moment that some of the other projects Google is working on will not fill the revenue gap. “Moonshots” like balloon based internet service, or drone services, or driving cars, or even Google Glass, are seen as “less profitable” at best.

However, Google Play is generating quadruple the revenues to app developers over a year ago and Chromecast is being billed as a success.  We have no doubt that Google will create innovative new services which will serve as new sources of income to replace the "ad click."

source: Forbes

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6 Comments

1. Ninetysix

Posts: 2933; Member since: Oct 08, 2012

*crickets*

4. sgodsell

Posts: 6902; Member since: Mar 16, 2013

I wonder if the drop is down a bit due to iOS 7.x has defaulted to bing instead of Google. Thats not to say users can still switch back to Google. But a lot of iOS users wouldn't even know which search engine they are currently using.

5. jroc74

Posts: 6023; Member since: Dec 30, 2010

"For the first quarter, Google grossed $15.4 billion with net revenues of $12.19 billion. Those figures include activity with Motorola. The industry analysts were expecting revenue of $15.6 billion and income of $12.3 billion" Of course there are crickets....its a non story.... With ppl having very little interest. I dont think Apple ever fell short by that little... partly because of the pedestal analyst put them on...they expect Apple to do soooo much better. "However, Google Play is generating quadruple the revenues to app developers over a year ago" Yea....Google will be fine....

2. Dastrix unregistered

No surprise here, considering that ad blocking extensions are the most popular add-ons on browsers, Chrome included (ironically). Who doesn't use ad blockers anyway?

3. good2great

Posts: 1042; Member since: Feb 22, 2012

they are not concerned about earnings... Google's growth will be paramount and people are going to wonder "where the hell did this come from?"... They will become the worlds most powerful company soon.

6. NokiaFTW

Posts: 2072; Member since: Oct 24, 2012

lol that was funny dude +1.

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