MIAMI, 15 JULY 2010 - Google grew its revenue and profits in the second quarter, but while revenue topped Wall Street's expectations, profits fell short.
Google generated revenue of US$6.82 billion in the quarter, ended June 30, up 24 per cent year on year, the company said Thursday.
Subtracting the commissions and other fees Google pays advertising and other partners, revenue was $5.09 billion, exceeding a consensus estimate of $4.99 billion from analysts polled by Thomson Financial.
Net income came in at $1.84 billion, or $5.71 per share, compared to $1.48 billion, or $4.66 per share, in the second quarter of 2009.
On a pro forma basis, which excludes certain one-time items, net income was $2.08 billion, or $6.45 per share, short of the $6.52-per-share consensus expectation from financial analysts.
"Google had a strong second quarter," said Google CEO Eric Schmidt in a statement. The company had solid growth in its core business of search advertising, and "very strong growth" in its emerging businesses, Schmidt said.
Google sites were responsible for 66 per cent of the total revenue, while partner sites generated 30 per cent. More than half of the company's revenue -- 52 per cent -- came from outside of the U.S.
Paid clicks, which are search ads on which people clicked, thus triggering a fee for Google from the advertisers, increased about 15 per cent year on year, but fell about 3 per cent from 2010's first quarter.
The cost of paid clicks, which is the money Google charges advertisers when someone clicks on a search ad, increased on average about 4 per cent year on year and about 2 per cent from 2010's first quarter.
Google makes most of its revenue from this type of pay-per-click ad that runs along with its search engine results and in Web pages of sites that belong to Google's advertising network.
Google's stock closed at $494.02 on the Nasdaq exchange, up slightly during the regular day's trading, but it had fallen 4.17 per cent in after-hours trading shortly before 6 p.m. U.S. Eastern Time. In the past year, the stock has ranged between $423.50 and $629.51.
"We're very pleased with our Q2 results," Chief Financial Officer Patrick Pichette said during a conference call to discuss the results.
Large advertisers that spend a lot on display ads, like banners and video spots, are increasingly incorporating search and mobile ads into their online marketing mix, a trend Google is focused on tapping into, he said.
Google's display ad revenue, historically a weak spot for the company, continues to grow, anchored largely by YouTube, the video sharing site whose massive popularity Google has tried to leverage for years to jump-start its display business.
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