Summary:

Google (NSDQ: GOOG) beat analysts’ heightened expectations Thursday, posting greater-than-expected jumps in both third quarter net income an…

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Google (NSDQ: GOOG) beat analysts’ heightened expectations Thursday, posting greater-than-expected jumps in both third quarter net income and net revenue. Net revenue was up 8.4 percent, while net income increased 27 percent, compared to a year ago. The company also managed to turn around a slowdown in its revenue growth. Google had posted a 4.5 percent increase in net revenue last quarter, after posting 10 percent growth in the first quarter of the year.

In recent weeks, Google executives had turned especially bullish about the state of their business. That, coupled with reports showing that the search ad market was growing again, had prompted some analysts to raise their estimates — but Google nevertheless managed to easily surpass them. In a statement, Google CEO Eric Schmidt said: “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.”

3Q 2008 3Q 2009 Estimate
EPS $4.92 $5.89 $5.42
Net Income $1.29B $1.64B
Revenue $4.04B $4.38B $4.24B

Paid click growth: Paid click growth continues to moderate. It increased 14 percent during the quarter, down from a 15 percent increase during the second quarter.

Cost-per-click: Cost-per-click fell six percent, a smaller decrease than the 9 to 13 percent fall that analysts’ had expected.

Google site revenues: Google site revenues increased 7 percent to $5.94 billion.

Networks revenues: Revenues generated via Google’s AdSense program were up 7 percent to $1.8 billion.

International revenues: International revenues accounted for 53 percent of Google’s business during the quarter.

Capital expenditures: Capital expenditures increased. They totaled $186 million, up from $139 million during the second quarter, which was a historic low.

Employment: Google’s workforce dropped for the third quarter in a row. The company said it had 19,665 employees, down from 19,786 employees at the end of June. Look for that to turn around, though, considering Schmidt’s statement about “investing heavily in our future.”

Earnings release | Webcast (1:30 PM PT)

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