How Google Made Its Q2 Numbers: Squeezing Expenses
Google made its earnings numbers yesterday, actually coming in above expectations. Total revenues were $5.5 billion, 3 percent above the same period last year and flat with the first quarter (when sequential revenues actually declined). Net revenues, which are the revenues which actually go to Google after they pay off AdSense and AdWords partner sites via traffic acquisition costs (TAC), came in at $4.07 billion. That was slightly above the Street consensus of $4.05 billion (see Citi’s cheat sheet below). Non-GAAP earnings came in at a respectable $5.36 earnings per share, well above the $5.05 Street consensus.
Investors should be ecstatic, right? Yet the stock is down $15 right now from yesterday’s close, to about $428. Some of that is selling on the news that advertising revenues have “stabilized.” But if you take a deeper look at the numbers, it looks like Google’s earnings strength has more to do with cost-cutting than with revenue growth.
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