IP Democracy: Another Strong Quarter for Google
Google is showing few signs of a slow-down. The Mountain View, CA-based search giant issued its Q2 06 earnings report this afternoon, posting seasonally strong revenues and extremely robust net income growth. Revenues were up 77% year-over-year and 9% sequentially to $2.46 billion for the quarter.
Net income soared 110% year-over-year and 22% sequentially to $721 million. (See table below.)
“It’s another good day, another good quarter for Google,” CEO Eric Schmidt said during Google’s earnings call. Schmidt emphasized the role of partnerships in Google’s success, saying somewhat teasingly that there would be “many, many more coming” in the months ahead. “We’re learning how to build a stronger ecosystem because frankly we can’t do it all by ourselves,” he said.
Capex costs are on the upswing and Google is clear that it plans to spend even more money on new servers, networking equipment, and data centers, as well as real estate and campus facilities, during the rest of the year. “We think we can’t put too much capex into the system,” CFO George Reyes said during the call. “There will definitely be an acceleration” in the months ahead. (What, exactly, Google will be spending its money on is not clear.)
Co-founders Sergey Brin and Larry Page were actually asked a question about net neutrality during the call — Google is a strong proponent of net neutrality rules. Brin said that Google is not afraid of a two-tiered Internet as much as it wants to preserve the current open environment for entrepreneurs.
“People don’t believe us when we say this, but we really care about net neutrality not for Google as a company but for all the smaller companies out there,” he said. Harkening back to Google’s start-up days, Brin said “our ability to have our services compete equally around the Internet was really a fantastic opportunity.”
Page suggested that broadband providers aren’t facing a capacity-crunch in terms of bandwidth usage, one frequent justification cited by phone companies and cable operators when they argue they need to set up rules that charge bandwidth-intensive services more money for throughput to the consumer.
People have been warning that “the Internet is going to melt down and people have been saying that for years and it hasn’t happened,” Page said. “We deliver a lot of video and we don’t see any issues” in terms of bandwidth congestion.”
| Google Financial Data | |||||
| ($ in mil.) | |||||
| 2Q05 | 3Q05 | 4Q05 | 1Q06 | 2Q06 | |
| REVENUES | $ 1,384.5 | $ 1,578.5 | $ 1,919.1 | $ 2,253.8 | $ 2,455.9 |
| Google Web Sites | $ 737.2 | $ 884.7 | $ 1,098.2 | $ 1,297.3 | $ 1,432.5 |
| Google Network Web Sites | $ 630.2 | $ 675.0 | $ 798.6 | $ 928.4 | $ 996.6 |
| Total Ad Revenues | $ 1,367.4 | $ 1,559.7 | $ 1,896.8 | $ 2,225.7 | $ 2,429.0 |
| Licensing &Other Rev. | $ 17.1 | $ 18.8 | $ 22.3 | $ 28.1 | $ 26.0 |
| COSTS AND EXPENSES | $ 908.8 | $ 1,049.3 | $ 1,349.5 | $ 1,511.1 | $ 1,640.6 |
| Cost of Revenues | $ 597.1 | $ 653.8 | $ 775.4 | $ 904.2 | $ 989.0 |
| Traffic Acquisition Costs | $ 494.3 | $ 529.9 | $ 628.9 | $ 722.7 | $ 785.2 |
| Other Cost of Revenues | $ 102.8 | $ 124.0 | $ 146.4 | $ 181.4 | $ 203.9 |
| Research & Development | $ 95.8 | $ 151.7 | $ 157.1 | $ 246.6 | $ 282.6 |
| Sales and Marketing | $ 97.0 | $ 105.0 | $ 154.8 | $ 190.9 | $ 196.4 |
| General and Administrative | $ 71.6 | $ 92.4 | $ 114.1 | $ 169.4 | $ 172.6 |
| Stock Based Compensation | $ 47.3 | $ 46.3 | $ 58.2 | na | na |
| INCOME FROM OPERATIONS | $ 475.7 | $ 529.2 | $ 569.6 | $ 742.7 | $ 815.7 |
| NET INCOME | $ 342.8 | $ 381.2 | $ 372.2 | $ 592.3 | $ 721.1 |
Posted by Cynthia Brumfield on July 20, 2006 5:40 PM to IP Democracy