Google profit trumps estimates on ad revenue growth

18 Jul, 2015

Google Inc posted a better-than-expected profit for the first time in the last six quarters, as advertising revenue jumped for the largest Web search engine, lifting its stock about 10 percent on Thursday. Google's stock "is reflecting the fact that they've effectively just beat earnings for the first time in several quarters," said Victor Anthony, an analyst at Axiom Capital.
Another catalyst, he added, new Chief Financial Officer Ruth Porat's comment in a statement that Google will exercise "great care regarding resource allocation." Google shares rose to $663.54 in extended trading after closing at $601.78 on Nasdaq. Advertising revenue rose 11 percent to $16.02 billion in the second quarter ended June 30 from a year earlier, while the number of ads, or paid clicks, rose 18 percent, the company said.
Advertisers pay Google only if a user clicks on one of its ads. "Cost per click," or the average price of online ads, fell 11 percent in the quarter, but was more than offset by the increase in ad volumes. Google's ad revenue has been under pressure as consumers access its services on mobile devices such as smartphones and tablets, whose ad rates are typically lower. The company's consolidated revenue rose 11 percent to $17.73 billion in the quarter.
Net income rose 17 percent to $3.93 billion, or $4.93 for each Class A and B share, from $3.35 billion, or $4.88 per share. Excluding items, Google earned $6.99 per share. Analysts on average had expected a profit of $6.70 per share, and revenue of $17.75 billion, according to Thomson Reuters I/B/E/S.

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