Google Posts Better than Expected Financial Results for the Q3

As expected, Google posted great financial results for the third quarter compared to the previous periods, which were affected by the deteriorating economic conditions. The company was believed to be recovering but the results were actually greater than analysts’ expectations by a significant margin. Revenue was at $5.94 billion for the third quarter ending September 30 and a bump of seven percent year over year, a nice change as revenue for the previous quarters stayed mostly flat year over year.

"Google had a strong quarter – we saw 7% year-over-year revenue growth despite the tough economic conditions," Eric Schmidt, Google CEO, said in his usual tone of late. "While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future."

Excluding traffic acquisition costs of $1.56 billion, revenue was at $4.38 billion, above expectations, which were at $4.24 billion. Net income is also significantly up at $1.64 billion, a 27 percent rise over the same period last year when Google managed to bring in $1.29 billion. The income breaks down to earnings per share of $5.13, up from $4.06 in Q3 2008.

The good results are based on a recovering ad market as Google relies almost exclusively on ad revenue. Advertising on Google sites generated $3.96 billion in the third quarter, about 67 percent of the company's entire revenue and an eight percent rise over last year's Q3. Revenue from the AdSense partner program also rose seven percent to $1.8 billion. Cost-per-click was down six percent compared to last year but up five percent from the previous quarter.

Employment numbers dropped again for the third quarter in a row reaching 19,665 down from 19,786 at the end of the second quarter. This is expected to change as Google has pledged to start hiring again and the company will also start investing again, hoping to spur further growth. Capital expenditures already rose from the last quarter to $186 million, up from $139 million, Google's lowest point, and acquisitions are expected to begin again.