Google Exceeds Revenue Predictions

The search giant Google exceeded Wall Street experts' expectation reporting record revenues. The income growth is based on the Google Ad programs coming in at $794 million, well above the highest analysts' estimates of $767 million.

Google's stock reached at new highs Thursday after the company reported first-quarter profit that was nearly six times higher than a year earlier. Before the Mountain View company released financial results, the stock had already increased 3.1 percent in regular trading to close at $204.22.

"This was a very strong quarter for Google. We continue to execute well and we have been able to take full advantage of the growth in online advertising" said Eric Schmidt, Google chief executive officer.

"In addition, we performed well across our operations with our engineering and product teams delivering dozens of new products and features for Google users around the world," added Schmidt.

The advert program which is in the basis of the Google's success depends on the number of searches and clicks on the advertisements displaying on the search result page. The advertising companies pay for the clicks and the increased number of visitors and popularity increase Google's revenues.

The world's leading search engine company Google reported record revenues of $1.256 billion for the quarter ended March 31, 2005, excluding the portion of revenues shared with partners. This is up 93% year over year.
Income from operations, on a GAAP basis, was $443 million, or 35.2% of revenues for the quarter ended March 31, 2005 compared to $155 million or 23.8% of revenues for the first quarter of 2004.

Income from operations includes a $49 million non-cash, stock-based compensation charge compared to a $76 million non-cash, stock-based compensation charge in the prior year's first quarter.

Net income on a GAAP basis in the first quarter of 2005 was $369 million or $1.29 per share on a basis of a diluted 286.6 million weighted average shares outstanding.

Net cash provided by operating activities for the three months ended March 31, 2005 totaled $530 million as compared to $208 million for the first quarter of 2004, an increase of 155%. Google computes its non-GAAP financial measures using the same consistent method from quarter to quarter and year to year.

Revenues in the quarter totaled a record $1.256 billion, representing a 22% increase over the fourth quarter of 2004 and a 93% year-over-year increase.

This revenue increase reportedly reflects strong traffic and monetization growth in the quarter as well as advertisers' growing recognition of the Internet as an effective advertising medium.

Google-owned sites generated $657 million or 52% of total revenues. This represents an increase of 116% over the first quarter of 2004.

One of the major Google rivals, Yahoo! Inc. the same period reported revenues of $1,174 million for the first quarter of 2005, a 55 percent increase compared to $758 million for the same period of 2004. Yahoo's marketing services revenue was $1,025 million for the first quarter of 2005, a 54 percent increase compared to $665 million for the same period of 2004.

Revenues generated on Google's partner sites, through AdSense programs, contributed $584 million, or 47% of total revenues, a 75% increase over the Network revenues generated in the same quarter last year.

Income from operations in the first quarter, on a GAAP basis, was $443 million or 35.2% of revenues.

The provision for income taxes in this year's first quarter was reduced by $49 million related to ISO disqualifying dispositions. The effective tax rate for the remainder of 2005 is expected to be less than 30%.

On a worldwide basis, Google employed 3,482 full time employees as of March 31, 2005, up from 3,021 as of December 31, 2004.

President and co-founder Larry Page said the company has "several efforts under way to get its advertising to be more graphical." Soon it can be expected Google to come up with new design decision on the Ads leaving the old design only for the distribution on other sites.

Google announced launch of  "My Search History"allowing users to find easily the searched before web pages when they need the information handy. The personalization is through the Google Account system and allows the users to search in the search history files of his or her searches on any computer.

Additionally Google added several entertaining and useful features allowing users to have access to a handy calendar to check the level of their Google activity on a given day, see related searches done over time and manage the search history from any computer.
The personalization will allow better results in future searches where the results will be based on the search history results and improved relevancy.