I've just finished listening to the Google Q3 2005 earnings conference call and what follows is a pseudo-transcript of what I heard. In just about all cases, you will NOT be reading exact quotes. Nevertheless, I hope the post gives you a good idea of what was said.
Again, what follows are extended notes of what I found interesting as I listened in. It's very far from being a complete transcript. If you want to hear the entire call (and find out what I didn't cover, listen to the actual questions that were asked by analysts, and pecifically how a question were or WERE NOT answered (Internet News.com lists a few of them at the end of their article), a replay is available here and worth a listen.
ES: We had another strong record breaking quarter in terms of revenues and profits...very pleased, even though these are traditionally slower quarters for Net properties.
ES: We are "effectively connecting" with our users and customers.
ES: Our focus is still in the long term
ES: In the near term, we are attracting a lot more business including Fortune 500 companies.
ES: Search and advertising remain in their nascent stages of growth
ES: Continuing policy of no forward guidance
GR: Explains new accounting procedures (see Google Blog for more)
Goes over the numbers
GR: Capital expenditures $293 million in Q3 vs. $157 in Q2 2005
GR: Estimating over $800 million in cap expend in 2005
GR: Google sites are growing faster than Google Network
GR: Network represented 43% of total revenue vs 46% last quarter
GR: Stronger revenues than expected in Q3 primarily because of product improvements
GR: In Q3 R&D spending increased from $152 million from $96 million in Q2.
GR: Expect to see growth in R&D for the foreseeable future
GR: We will invest in our business regardless of short term characteristics
GR: Increase of cash primarily from equity offering that raised $4.3 billion
GR: Discusses Google Foundation, money will be recorded as an expense in Q4 2005.
GR: Google employed 4,989 full time employees as of September 30, 2005, up from 4,183 as of June 30, 2005. 2668 as of Sept 30, 2004.
LP: Gaining momentum in last quarter in our goal to make the world's info universally accessible and useful
LP: Very happy with progress, new products
LP: We celebrated 7th birthday by launching a significantly expanded search index, 1000 times larger than the one we started with. "That makes Google three times larger than any other search engine by our estimates*." Note the last word or two of Larry's comments were garbled, so I'm doing my best with the conclusion of his comment.
LP: Release of Desktop 2/Google Sidebar
LP: Release of Google Talk
LP: Google Maps and Local Combined
LP: New data layers for Google Earth
LP: Enhancements to Google Video
LP: Google Blog Search
LP: Lower price of Google Mini
LP: Calls San Francisco bid, make opportunity a "test ground."
LP: Google Print work
SB: "Advertising continues to drive most of our business."
SB: Site Targeted campaigns. More than 25% of Google's Top 100 advertisers have bought a site-targeted campaign
SB: Google Ads in print magazines, "hundreds" of other mags interested in participating
SB: New Reseller program in China, Google Local in China
SB: Q3, Completed over 20 New Deals including Univision and Sun
SB: Q3, Renewed over 20 partnerships to distribute AdSense and search services around the world.
SB: Agreement with Sun, looking forward to working with them to find more ways to extend mutual technologies
SB: NASA plans are mentioned
SB: Google.org and Google Foundation founded with $90 million dollards
SB: New employees to Google team include Dr. Kai-Fu Lee, Dr. Vint Cerf, and new Google board member, Dr. Shirley Tilghman
ES: We continue to focus on end users and the quality of info and ads they'll need.
ES: We are particular happy at how happy this is working at scale.
ES: You need both, access and information
ES: People are increasingly demanding the most intuitive and personalized technologies and we are building them.
ES: We believe that the most direct way to access the world's information is and will continue to be through Google
On Google Wi-Fi Plan in SF?
LP: Excited about extending net access in general. SF is an experiment and provide services in environments where people have good access to the Net. No other cities have been announced.
What do they think of other monetization models, classified ads?
JR=Jonathan Rosenberg: Site targeting efforts is biggest way to grow monetization
OK=Omid Kordestani: We are trying to really understand how advertisers want to work with us. Pay-Per-Click was asked about but not answered specifically. Nothing on classified ads.
GR: Very robust in growth in Google.com with modest growth in Google Network (see numbers). Cyclical.
JR: We're monetizing the business better that lets us reach customers better. Better targeted ads (site-targeting, more effective, increase ROI). We're developing lots and lots of ways to make it easier ways for smaller businesses to come onto the network and monetize.
OK: Trying to simplify for advertisers. Introduction of Smart Pricing. Do it by considering conversion info. Make it simple but also make it as close as possible to the ROI metrics everyone is interested in.
ES: Biggest change is sales force": the verticalization [industry focus] of sales force.
OK: Working the way the customers want to work with us. Make it smooth for our customers to work with the best channel for them.
JR: Moving into brand budgets with big Fortune 500 customers...big trend that effects Google and others.
OK: Smart Pricing designed to really put a discount in areas that is not converting as well.
OK: Google Mini product doing very well.
On adding a third link
LP: It's a very good question. You will see us making very many changes like that, we would like to make very many more changes like that. It's hard to go over specifics.
SB: There have been have lost a handful of accounts, relatively small ones. No particular pattern.
ES: AOL has been one of our longest and tightest partners for many years. That work continues. They are a very very valued partnered. We hope it continues forever.
ES: VoIP and Instant Messaging are growing and becoming a significant part of peoples online experiences.
ES: "We don't do the same thing as every else does. And so if you try to predict our product strategy by simply saying well so and so has this and Google will do the same thing, it's almost always the wrong answer. We look at markets as they exist and we assume they are pretty well served by their existing players. We try to see new problems and new markets using the technology that others use and we build."
JR: More money moving into pay-per-click model. Other platforms that we can apply ad network to (ie. print). Main focus on sea change in advertising.
ES: The days of the unified online experience. Google intends to be the primary mechanism for access to all of that info. We have done a large number of deals with mobile operators. Sun is valuable for toolbar distribution and other tech. Give people choices about which platform people want to use.
OK: We are busy building capabilities across the globe. Business model truly working across the globe. UK is our strongest market overseas.
OK: Search network is pretty stable for us. Still tremendous opportunities. Partners are spending.
JR: We're holding or gaining market share in all markets.
SB: We're excited about Gmail but still looking at it as a platform to build/experiment vs. a revenue producer.
ES: When we look at the quarter we see improvements in monetization across the board. It spans all categories. It's not a single product, it's a discipline around of new product development that touches across the entire portfolio of the company.
ES: Things are obviously going very well here. What is great about this business is that it can be extended very very broadly. It's a very very very big space.