Earnings: GOOG Q3 Revenues Up 70 Percent; Profit Zooms 92 Percent

Oh the irony … I’m looking at Google’s earnings on Yahoo because they aren’t posted yet on the company’s own investor site. (Google isn’t alone — all too often the company site is the last place.) Still, my guess is Google prefers being second in that area and first in revenue. The company’s 3Q revenues hit $2.69 billion, up 70 percent over 3Q05.
But — and this goes a long way to explaining why YouTube could wind up being worth more than $1.5 billion to Google — the sequential increase was 10 percent over 3Q06. That would be fine for many other companies and it’s a very strong quarter for Google but it’s also a hint of maturity and another signal of the need to add major growth opportunities.
Profits zoomed 92 percent to $733.3 million from $381.1 million in the same quarter last year. That translates into a whopping earnings per share of $2.36 compared with $1.32 last year. Again, the jump sequentially from $721 million and earnings per share of $2.33 last quarter is much smaller.
— The revenue numbers include traffic acquisition costs (TAC) of $825 million — 31 percent of ad revenues, down slightly from 32 percent in the second quarter.
— One more point about the second and third quarter numbers made by CFO George Reyes as the conference call begins: Google usually considers the two quarters to be “seasonal” — traditionally a little weaker in some areas.
— Google-owned sites brought in $1.63 billion or 60 percent of revenues; that’s an 84 percent increase of 3Q05 and 14 percent sequentially.
— The AdSense partner sites generated $1.04 billion, 39 percent of total revenues; that’s up 4 percent over last quarter. Payments of $780 million to AdSense partners made up the bulk of TAC; another $45 million went to “certain distribution partners and others who direct traffic to our website.”
— On the international front, non-U.S. revenues attributed for 44 percent of the total, up from 42 percent last quarter and 39 percent in 2Q05. During the earnings call, Google answered an analyst’s question by saying UK revenues accounted for 16 percent.
— In operating expenses, $50 million went to advertising and promotion; that includes $14 million related to “certain distribution deals.”
— 99 percent of Google’s total revenues continue to come from advertising; the remaining 1 percent comes from licensing and other revenues.
Release | Webcast (4:30 p.m. eastern) | Earnings slides

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