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Google Releases Q3 2005 Earnings

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Google has just released their Q3 2005 earnings, as covered in this press release.

"Although this is typically a slower season for Internet properties, we had another exceptional quarter," said Eric Schmidt, Google chief executive officer. "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."

From The WSJ/Dow Jones

The Mountain View, Calif., company said earnings for the quarter were $381.2 million, or $1.32 a share, compared with a profit of $52 million, or 19 cents a share, in the year-ago quarter. Total revenue reached $1.58 billion, up 96% from $805.9 million last year. Wall Street forecast revenue of $939.2 million, excluding the commissions Google pays to marketing partners. On that basis Google brought in $1.05 billion in revenue, while the comparable year-earlier figure was $503 million.

From the Google News Release
+ GAAP net income for the third quarter was $381 million as compared to $343 million in the second quarter, an increase of 11%. Non-GAAP net income was $437 million, compared to $381 million in the second quarter, an increase of 15%.

+ GAAP EPS for the third quarter was $1.32 on 290 million diluted shares outstanding, compared to $1.19 for the second quarter, on 287 million diluted shares outstanding. Non-GAAP EPS was $1.51, compared to $1.33 in the second quarter.

+ Google reported record revenues of $1.578 billion for the quarter ended September 30, 2005, up 96% compared to the third quarter of 2004, and up 14% compared to last quarter. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs, or TAC. This quarter, TAC totaled $530 million, or 34% percent of advertising revenues.

Revenues
+ Google Sites Revenues - Google-owned sites generated $885 million, or 56% of total revenues. This represents a 20% increase over the second quarter revenues of $737 million.

+ Google Network Revenues - Revenues generated on Google's partner sites, through AdSense programs, contributed $675 million, or 43% of total revenues. This is a 7% increase over network revenues of $630 million generated in the second quarter.

+ International Revenues - Revenues from outside of the United States contributed 39% of total revenue, compared to 39% in the second quarter and 35% in the third quarter of 2004.

+ TAC - Traffic Acquisition Costs, the portion of revenues shared with Google's partners, increased to $530 million. This compares to total payments to partners of $494 million in the second quarter. TAC as a percentage of advertising revenues decreased to 34.0% in the third quarter from 36.1% in the second quarter, reflecting the continued shift in our revenue mix from Google network revenue to Google site revenue.

+ Employment: 4,989 full time employees as of September 30, 2005, up from 4,183 as of June 30, 2005. Google had 2,668 as of Sept 30, 2004.

Listen to replay of conference call here. See our post, Pseudo-Transcript Of Google Earnings Call.

Additional Coverage via:
+ Bloomberg
``The strength is from a lot of areas,'' said Rick Summer, an analyst with Morningstar Investment Services Inc. in Chicago. ``There was tremendous growth in online advertising, which is not abating at all.''

+ Reuters
"Google is still top of mind for folks doing Web searches and that shows up in these results," said Rick Summer, equity analyst at Morningstar in Chicago.

+ InternetNews.com
Executives deflected questions about how or when they might try to monetize these non-search offerings. Co-founder and president Sergey Brin said the company saw Gmail not as a moneymaker, but as a platform on which to build more services. "Advertising continues to drive most of our business, and we continue to expand our advertising products," he said....They [Google execs] also blew off queries about rumored moves into classified listing search, VoIP and thin-client computing, also known as the Google operating system.


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