Mountain View (CA) - Google showed a negative quarter-to-quarter change in operating income this quarter for the first time since the company went public in 2004.

Google's Q2 2007 results were announced today.  The search giant reached a record $3.87 billion in total revenue, a 58% increase over Q2 2006.

During the second quarter of 2006, Google's revenues tapped out at around $2.46 billion.  In the first quarter of this year, it earned $3.66 billion.  Q2's revenue represents a 9% growth over Q1 2007.

Total revenue from actual Google sites was $2.49 billion, while its "network revenues" reached $1.35 billion.  This counts money earned from partner sites that are connected to Google's AdSense program.

Google also once again showed strength in the international market.  $1.84 billion, or 48% of all revenue, came from markets outside the United States.  A large part of that was the United Kingdom, from which $600 million in revenue was generated.

Each of these revenue numbers is a record for Google.  However, profits were down compared to last quarter.  Operating income, or the amount of revenue before interest and taxes, totaled $1.1 billion this quarter.  That's down 9.8% compared to the first quarter figure of $1.22 billion.

This is the first time since Google went public in late 2004 that quarter-to-quarter operating income shows a decline.

Net income, which is the final amount of revenue after all expenses, was $925 million this quarter.  During Q1 it was right around $1 billion.  That's a 25% decline.  This is also the biggest relative and absolute quarter-to-quarter decline in net income for Google.

In other words, despite the massive revenue recorded for this quarter, more than 75% of it was spent on operating costs, acquisitions, and other miscellaneous expenses.  

Google's Traffic Acquisition Costs, made mostly of money paid to AdSense partners, was $1.15 billion this quarter, compared to $1.13 billion last quarter.  Operating expenses were also significantly more for Q2.  Compared to $972 million in Q1, this quarter saw $1.21 billion in costs like payroll and facilities expenses.

Other revenue costs were around $412 million.  This includes acquisition costs and other daily operational fees.  This number was $345 million last quarter, meaning costs in this field grew 19.4% in the last three months.

During this quarter, Google acquired or announced plans to acquire Web security compaby Postini, online communications specialist GrandCentral, and fellow ad provider DoubleClick.

Though it fell from last quarter, Google's income was significantly higher on a year-to-year basis.  Q2 2006 operating income was $815 million, and net income was $721 million.  This quarter's figures represent a 24% and 28% growth, respectively.

25% decline from 1000 to 925?

Jul 20, 2007 10:05     

How do you make those numbers? From 1 billion to 925 million... 7.5% Antonio.
CIISTiado(António Lourenço) report abuse vote down vote up Votes: +0