Google Q3 Earnings Leak: $14.1 Billion, Disappoint Surprised Investors

google-g-logo-2012Google’s Q3 “consolidated earnings” leaked early and are below analysts’ expectations. Search clicks were up 33 percent vs. a year go but CPCs were down 15 percent, probably a result of the impact of lower mobile CPCs. Traffic acquisition costs were also up, as were other expenses.

Investors were surprised by the early release and generally disappointed. The press release, which appeared on the SEC website, says “pending Larry quote.” So the early release was a draft and not final. Clearly this was a mistake. Earnings were supposed to come out after the market closed today. Nonetheless the proverbial cat is out of the bag.

Total Google consolidated revenues (including Motorola) were $14.1 billion, which represents a 45 percent increase vs. last year. Indeed, this was the first quarter in which Google reported Motorola revenues.

Google reported that Motorola brought in $2.58 billion (“$1.78 billion from the mobile segment and $797 million from the home segment”). This was 18 percent of consolidated Q3 revenue. However there was a Motorola operating loss of $527 million.

Google top-line results:

  • Google (only) Revenues: $11.53 billion or 82 percent of total revenue (including Motorola). This was a 19 percent increase over Q3 last year.
  • Google Sites Revenues: Google properties saw $7.73 billion, which was 67 percent of total quarterly revenues. It also represents 15 percent growth over last year.
  • Google Network Revenues: $3.13 billion, or 27 percent of total Google revenues — a 21 percent increase vs. a year ago.
  • Google International Revenues: $6.11 billion or 53 percent of total Q3 revenue. UK revenues were $1.22 billion (or 11 percent of the total).

Here are some additional details from the release:

  • Paid Clicks – “increased approximately 33 percent” vs last year and 6 percent vs. Q2.
  • Cost-Per-Click – “decreased approximately 15 percent” compared with Q3 2011 and down 3 percent vs. Q2. This may be a result of mobile CPCs being quite a bit lower (marketers are valuing mobile clicks less than PC clicks)
  • Traffic acquisition costs, paid to network partners, increased to $2.77 billion in Q3 (vs. $2.21 billion in Q3 2011).
  • Other Cost of Revenues – “increased to $3.78 billion, or 27 percent of revenues.”

Google cash on hand and cash equivalents was $45.7 billion in Q3. The company also said it had 53,546 full time employees (36,118 Google, 17,428 Motorola). Google also paid an effective tax rate of 22 percent for Q3 2012.

In response to the leak Google stock was down roughly 10 percent. Trading of Google was halted for a couple of hours today.

Postscript: The official release is now out. Below are the Q3 earnings slides.

Related Topics: Channel: SEM | Google: AdWords | Google: Business Issues

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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  • http://twitter.com/Dailyfotos Dailyfotos

    still enough :)

  • Filip Galetic

    I wonder how they are planning to counter lower CPC due to mobile in the long run? People are increasingly using their mobile phones to browse internet.

  • Durant Imboden

    It’s interesting that “network revenues” grew faster than revenues at Google’s own properties. All those behaviorally-targeted AdSense display ads that I see around the Web must be bringing in some money.

  • Marcus Wong

    i liked how the investors panicked and Google stock dropped a whopping 10% when it’s only a leaked quarter earnings. imagine if an seo abandoned the campaign he was working on due to a 10% drop in site traffic at any time. well i guess investors have more to lose, though i still think that was a knee jerk reaction.

  • Alan

    I wonder if Googles barely disguised attempt at driving publishers to adwords has backfired on them. All the big spenders (brands) name control the serps so they don’t need adwords (why would you when you got position 1 through to 9!). The poor little publishers don’t have the same kind of budget, the big guys do.

    The other possibility is that they have wiped out so many little publishers that used to spend part of their organic revenue on adwords. These guys can no longer afford to pay for their adwords campaigns!

    I would love for one of these to be true but I doubt this is the case, it would be more like an aberration. It will come back next quarter!

  • http://twitter.com/Neuromancer Maurice Walshe

    Its a diferent sort of searching on mobile People are going to reaserch big ticket items that command high CPC ads on a proper pc not a smart phone

  • http://twitter.com/mspecials mspecials.com

    I guess google is now seeing why the shopping clicks and cutting organic links from 10 to 7 was a very bad idea. Forcing American merchants to pay so much while the rest of the countries have shopping click for free is not fair.

  • Ittiam

    When a stock goes up 30% fast, for no apparent reason, one can bet it will also fall quicker

  • Durant Imboden

    I’d guess that it’s a numbers game. Assuming that mobile leads to more traffic overall (and to more local searches and ads), the total number of revenue-producing clicks should expand, so total revenue should increase even as average CPC declines.

  • http://twitter.com/freegiftcardshq Dean Calvert

    Big G will go down soon. Obvious that they are returning garbage results in many niches now, trying to force webmasters to pay for adwords to make up their losses and their money grubbing tactics will burn them. Screw Google am already migrating to Bing and other sources

  • http://blog.clayburngriffin.com/ Clayburn Griffin

    I now wish to sell all my shares of GOOG.

  • http://twitter.com/jody02798075 jody

    ihiv

  • http://twitter.com/jody02798075 jody

    nhoieoennnw

  • Pat Grady

    In your own biz, if you successfully added a new, fast-growing channel, that happens to have lower prices, after your investors asked you to diversify… they’d cheer you. The stock market isn’t rational, and can’t understand basic math. OMG, CPCs are down on average, run for the hills! :-)

  • Alan

    Really hope that Eric Schmidt’d money grubbing attitude has come back and bit him on the ass! He appears to be the instigator of most of Google’s direction this year! Once a grub always a grub!

  • Durant Imboden

    How many publishers use AdWords? E-commerce sites do, but publishers? Not many, in my experience.

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