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Thursday, October 21, 2004
Google Beats Expectations
Google announced that their third quarter revenues were $805.9 million, up an unbelievable 105% from the same quarter last year.

Things I've noticed from the release and the conference call:
Google's revenues are almost split between ads on Google sites ($411.7 million, or 51%) and ads on AdSense partner sites ($384.3 million, or 48%). Google sites saw a 99% increase, while AdSense sites saw a 120% increase.
Google gave out less stock-based compensation this quarter, down from $73.8 million to $68 million.
Google has $1.86 billion in cash.
Google expects it's tax rate to trend lower, to 38%, from the 53% rate it currently suffers.
Google has 2,668 employess, adding 376 from 6/30 - 9/30.
Google doesn't plan on rushing its beta process any time soon. It likes to think long-term, and in terms of quality. Google's strategy is first make the product "exceptional", then monetize it, especially with Desktop.
Froogle and Gmail are still young and not significant sources of revenue.
International revenue grew 145%, according to Mark Mahaney.
Google Travel seems unnecessary to Google, because of their close relationship with travel companies. But they do think the name "Troogle" is too silly, even for Google.
Google is not planning on being a portal, ever, at least as far as they are concerned now.

The release summary:

Financial Release


Company reports revenues of $805.9 million, up 105 percent year over year in first post-IPO quarter.

MOUNTAIN VIEW, Calif. – October 21, 2004 – Google Inc. (Nasdaq: GOOG) today announced financial results for the quarter ended Sept. 30, 2004.

  • Google reported record revenues of $805.9 million for the quarter ended Sept. 30, 2004, up 105 percent year over year.
  • Income from operations, on a GAAP basis, was $11.1 million, or 1.4 percent of revenue for the quarter ended Sept. 30, 2004 compared to $66.6 million or 16.9 percent of revenue for the prior year’s quarter. Income from operations includes the effects of a non-recurring, non-cash charge of $201.0 million related to the previously announced settlement of warrant and patent disputes with Yahoo! Inc.
  • Without this non-recurring charge, Google would have realized income from operations of $212.1 million or 26.3 percent of revenues for the quarter ended Sept. 30, 2004, compared to $66.6 million or 16.9 percent of revenues in the prior year’s quarter.
  • Income from operations includes a $68.0 million non-cash stock-based compensation charge compared to a $73.8 million non-cash, stock-based compensation charge in the prior year’s quarter.
  • Net income on a GAAP basis in the third quarter of 2004 was $52.0 million or $0.19 per share on a diluted basis. Net income before certain non-recurring items was $125.0 million or $0.45 per share on a diluted basis. The non-recurring items are the settlement charge and its associated tax benefit, as well as a reduction to our provision for income taxes related to certain stock-based compensation charges recognized prior to the IPO.
  • Net cash provided by operating activities for the nine months ended Sept. 30, 2004 totaled $608.9 million as compared to $308.9 million last year during the same period, an increase of 97.1 percent.
  • Adjusted EBITDA, another liquidity measure, increased by approximately $44 million or 16 percent to $321 million (or 40 percent of revenues) in Q3 from $278 million (or 40 percent of revenues) in Q2.

“We are very pleased with the results of this quarter. Record revenues, robust margins and cash generation all illustrated strong performance and execution over the last quarter,” said Eric Schmidt, Google chief executive officer. “Our commitment to users and to the development of quality products and services for them clearly translated into robust financial results. That dedication to our users, combined with our relentless technology innovation and market opportunity make us very optimistic about our company’s future.”

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