IP Democracy: Google's Going Gangbusters -- Q3 06 Earnings Stellar

Search giant Google issued its Q3 06 earnings report this afternoon and the results are nothing short of superb — revenues continue to surge while profits escalate. Revenues jumped 70% year-over-year and 10% sequentially to reach $2.69 billion. Net income almost doubled, increasing 92% year-over-year and 2% sequentially to $730 million.

As has always been the case, advertising revenues account for almost all (99%) of revenue. Google-owned site revenues accounted for 60% of the total, up from 56% of all revenue a year ago. Network, or AdSense, revenue accounted for 39% of ad revenue, down from the 43% of all ad revenue it represented a year ago. International revenue grew during the quarter, rising to 44% of all revenue, up from 42% in Q2 06 and 39% in Q3 05.

Google Financial Data ($ in bil.)
	3Q05	4Q05	1Q06	2Q06	3Q06
REVENUES	$1.58	$1.92	$2.25	$2.46	$2.69
Google Web Sites	$0.88	$1.10	$1.30	$1.43	$1.63
Google Network Web Sites	$0.68	$0.80	$0.93	$1.00	$1.04
Total Ad Revenues	$1.56	$1.90	$2.23	$2.43	$2.66
Licensing and Other Revenues	$0.02	$0.02	$0.03	$0.03	$0.03
COSTS AND EXPENSES	$1.05	$1.35	$1.51	$1.64	$1.76
INCOME FROM OPERATIONS	$0.53	$0.57	$0.74	$0.82	$0.93
NET INCOME	$0.38	$0.37	$0.59	$0.72	$0.73

Aside from these basic facts, there’s not much more to say about the outstanding string of quarterly financial results that Google has produced. During the earnings call, CEO Eric Schimidt provide a few more details on the YouTube purchase, and indirectly confirmed that the record companies bought stakes in YouTube before the deal closed.

“We were able to do some very interesting deals using a combination of financial pre-payments, revenue shares and other ways in which the money flows. The best partnerships come when both partners have an ownership share in the deals,” Schmidt said.

He also touched on whether Google might be over-relying on the Digital Millennium Copyright Act’s take-down provisions as protection against infringement lawsuits. Schmidt’s straightforward answer: the law is the law and Google complies with the law.

“We are definitely not relying on a liberal or conservative interpretation of the DMCA. We are relying on the Digital Millennium Copyright Act as it’s being applied as a matter of law,” he said. “Whether people like it or not, it’s the law of the land and we abide by it.”

Posted by Cynthia Brumfield on October 19, 2006 5:34 PM to IP Democracy