Google's (NASDAQ: GOOG) second-quarter results wowed investors yesterday, as the search giant reported strong revenue growth from advertisements on mobile devices and on its YouTube video platform. Google said earlier this year searches on mobile devices now outnumber those on desktop and laptop PCs in 10 countries, including the U.S. and Japan. The stronger-than-expected earnings ad revenue results pushed Google's shares up 12 percent in after-hours trading yesterday, according to The Wall Street Journal.
As a result of rising use of smartphones, largely driven by Google's own Android operating system, the company has seen a steady drop in its "cost per click," which is how much Google gets paid, on average, every time a person clicks on an ad. Ruth Porat, Google's new CFO, said the gap between desktop and mobile is closing, as mobile prices rise and desktop prices remain steady, according to The New York Times.
"Specifically on mobile, we're pleased with our ongoing progress resulting from our focus on user experience, ads quality and online to offline commerce initiatives," Porat said on the company's earnings conference call. "The combination of these efforts improves the effectiveness and value of mobile for users and marketers alike. Desktop search delivered solid revenue growth again this quarter. YouTube again delivered substantial growth in user engagement globally, particularly on mobile, which translated into strong adoption of our TrueView ad format."
Google said its net income for the quarter clocked in at $3.9 billion, or $6.43 per share, up from $3.4 billion, or $4.88 per share, a year earlier. Excluding certain costs, Google said it would have earned $6.99 per share, higher than the $6.70 per share had expected on that basis, according to a Thomson Reuters poll. Google said revenue jumped 11 percent in the quarter to $17.7 billion. However, when excluding traffic-acquisition costs--which is money Google shares with companies that syndicate its search results--revenue came in at $14.35 billion, beating analysts' expectations of $14.27 billion. Release