Google leaps ahead of Wall Street projections to post record Q4 results
Google Inc. posted net income of $204 million on revenues that rose to a record $1.032 billion from the year-ago quarter for fourth quarter ended Dec. 31, the company reported Tuesday. That compares with net income of $27.3 million for Q4 2003. Net income is based on revenues minus traffic acquisition costs—the portion of revenues shared with partners—plus other costs and expenses. Traffic acquisition costs were $378 million for the quarter.
“Google had an exceptional quarter. Revenues and traffic increased significantly,” says Eric Schmidt, CEO, noting that Google achieved the results “while we continued to innovate, expand around the world and make strategic, long-term investments.” Based on Google`s share price when the markets closed Tuesday, Google`s market value is estimated in the range of $55 billion.
Search revenues from Google-owned sites generated $530 million or 51% of total revenues for the quarter, representing growth of 118% over Q4 2003. Revenues generated on Google partner sites contributed $490 million or 48% of total revenues, up 92% from last year.
For the year, Google posted net income that rose 278% to $399 million from last year, on revenues that rose 118% to $3.189 billion. Of that total, revenues from Google-owned sites rose 101% from last year to $1.6 billion, which Google attributes to a rapid increase in the number of visits to its sites and to its “accumulated knowledge of how to more effectively and efficiently monetize that traffic.”
Among Google’s efforts to better monetize its increased traffic is its growth of the Google Network, where revenues rose 147% from last year to contribute $1.6 billion, equaling the revenue contribution of its owned sites. The Google Network expands click-through opportunities for Google and the marketers who use Google AdWords by distributing AdWords across a network of search partners. Beyond that, Google’s AdSense program distributes contextually-relevant ads to online media and other content destinations, which extends its ad inventory even further.
Another element helping to drive Google’s revenues from search is its dominance abroad. Google gets about 35% of all U.S. Internet searches, but its share of the search market in countries such as the United Kingdom and Canada, where competitors such as AOL and MSN have less presence, is 60% or more, according to James Lamberti, vice president of comScore Networks Marketing Solutions. “That’s twice the market share in those countries,” says Lamberti. “Though those countries are smaller and don’t necessarily have the developed search market that the U.S. does, it’s a contributing factor.”
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