Google HQ in Mountain View, California (via turtix/Shutterstock)
While analysts predicted an increase in net income for Google, the search giant posted a drop in profits to US$2.81bn after months of heavy spending on real estate and recruitment.
Google conducted its earnings conference call with investors at 9.30pm IST on Thursday, 16 October after the market closed on Wall Street.
In recent weeks, analysts had expressed concern about the company’s increased spending and its impact on profit margins.
Despite that, the forecast for Google’s financial results expected an increase in net income from US$2.97bn a year ago to US$3.69bn.
Concerns were validated, however, when the results revealed a year-on-year decrease in profit to US$2.81bn.
Google was just shy of meeting revenue expectations of US$16.6bn, though, and this figure was a marked 20pc year-on-year increase at US$16.52bn.
Google’s quarterly revenues (Source: Google)
As well as a lot of spending on capital projects such as data centres and recruitment (Google’s headcount has grown from 52,069 in the last quarter to 55,030 now), another area of concern for investors was decreasing revenue from advertising.
Google remains the king of desktop search, but that dominance is lessened in the mobile context while revenue from mobile ads is also weaker.
However, Omid Kordestani, former interim and now officially chief business officer for Google, says the company is still making money on search and is happy with the trends.
Backing up this sentiment, paid clicks increased by 17pc, though cost-per-click dropped 2pc.
Kordestani also remarked on those ads for YouTube you may have seen on television of late as Google strives to let the world at large know that the video-sharing network is more than just cat videos, and that is actually a platform for premium content from which Google can exploit premium advertising.
Google’s quarterly revenues (Source: Google)
Of course, Kordestani also paid reverence to Google’s latest batch of products in software and hardware, from Android 5.0 Lollipop to a new family of Nexus devices.
Google, as always, is taking the long-view, and Kordestani also reminded investors of projects like Android One, where the company is homing in on growth and profitability areas.
Google’s shares fell 5pc in after-hours trading but recovered swiftly to close with a decrease of 2.7pc.
Google HQ image by turtix via Shutterstock
