Google, struggling from last two quarters in meeting market expectations, might take a sigh of relief, with the recent disclosure of Q3 earnings result. For Q3 FY13, the company posted a revenue of USD 14.9 Bn, a 12% increase over the third quarter of 2012 and an approx. 6% increase over the second quarter of 2013.
Net income for the quarter was approx. USD 3 Bn or USD 8.75 a share. TAC totaled USD 2.97 Bn, or 24% of advertising revenues, slightly less than the Q2 2013 figure of USD 3.01 Bn.
Investors can rejoice with the current quarter results beating the Wall Street estimate of USD 10.34 EPS on revenue of USD 14.8 Bn, thereby gaining USD 10.74 EPS on revenue of USD 14.9 Bn. Also, immediately after the earnings reports release, Google shares rose by more than 6% in after hours trading.
At the time of writing, Google shares were up by approx. 6%.
The quarter saw a revenue growth in several areas, including the new market segments such as Google Play marketplace, where it charges for downloads of media and apps, as well as new hardware such as the Chromecast streaming device and Chromebook computers. Larry page, during the earnings call, also marked the improvement in YouTube performance, getting 40% of its traffic from mobile, up from just 6% two years ago.
Considering the negatives, Google Ad prices, known as cost per click, fell 8% Y-o-Y and 4% over the last quarter. The overall ad prices dropped around 6% in the last quarter and 2% in Q1 this year. The results though seem to be on the improving side, but surely Google is not looking for such a trend.
Google , through its enhanced campaigns- a series of recent changes in its advertising policy- has been quite successful in making higher click volumes. But analyst seem concerned with the lower costs-per-click for the quarter, which results in lower ad revenue for the search giant. The decrease was however offset by a 26% Y-o-Y increase in the paid clicks and an 8% up over the last quarter.
As per a Forbes report, at present major challenge ahead for Google is to get more advertisers to try mobile advertising.Talking about Motorola, it continues to be a loss making entity reporting a decline in revenue from USD1.78 Bn in Q3 2012 to just USD 1.18 Bn in Q3 2013, a loss of USD 248 Mn on the quarter. However, during the earnings call, Google seem positive on its success counting on the recently launched MotoX and said it would continue building out marketing and distribution for Motorola over the coming years.
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