Google Posts a Big Quarter, and a Big Mobile Ad Number

Published on October 13, 2011
by Peter Kafka

Google hates breaking out any numbers about its business, but occasionally it breaks from tradition and gives itself a pat on the back. Last year, for instance, the company boasted about its YouTube numbers, its display ad numbers and its mobile ad numbers.

And today the company did the same thing — but only for mobile. CEO Larry Page said mobile is now on a $2.5 billion run rate, up from $1 billion a year ago.

So that’s really big. But what exactly does that mean? More mobile searches? More mobile display ads? More in-app advertising via AdMob? All of the above?

Wall Street will have to guess. Same goes for display ad numbers in general, as well as YouTube, because the company wasn’t talking about those, either, except to say that both were doing very well.

You’re not surprised, right?

If you’re looking for a non-number takeaway, I’d offer this: I think someone is working with Larry Page on his presentation skills. And/or he is getting much more comfortable on earnings calls.

Page, who by all accounts is the kind of person who would hate the Kabuki of these rituals, seemed to be making a conscious effort to put forth a sunnier face today — complimenting analysts on their questions, etc.

Of course he rarely offered a detailed — or even direct — answer to most, so things haven’t changed that much. Doubt they ever will.

First look at Google earnings: Big beat on earnings, with Google reporting revenue of $7.5 billion and earnings of $9.72 a share. Wall Street, depending on which estimates you pay attention to, was looking for $7.2 billion and $8.74 a share.

CEO Larry Page, who doesn’t tend to get excited during earnings calls, uses an exclamation mark in his canned statement, and talks up Google+, his would-be Facebook-killer: “We had a great quarter.¬†Revenue was up 33% year on year and our quarterly revenue was just short of $10 billion. Google+ is now open to everyone and we just passed the 40 million user mark.¬†People are flocking into Google+ at an incredible rate and we are just getting started!”

Google is now up to an astonishing 31,353 employees, up from 23,331 a year ago.

I’ll be liveblogging the call at 4:30, assuming my tech holds up. (Grrr. Time Warner Cable.) Meantime, here’s the “cheat sheet” from Citi’s Mark Mahaney, so you can play along at home.

4:32 pm: Greetings! Typing live now. On the call: Page, CFO Patrick Pichette, sales boss Nikesh Arora, product guru Susan Wojcicki.

And if you want to hear this for yourself, check out YouTube.

4:33 pm: Larry talking up velocity, bragging about feature rollouts for Google+. “Looking at the numbers for Google+, I was taken aback.” In a good way, apparently.

4:35 pm: Larry now talking about “focus.” “We have to make tough decisions about what to focus on.” Have shuttered 20 Google projects in last quarter. “Crucial, if we are to really invest in the extraordinary opportunities in front of Google today.”

4:36 pm: Newest Android number: 190 million activated globally.

4:37 pm: Mobile revenue run rate now $2.5 billion, up from $1 billion a year ago.

4:38 pm: On to Pichette, to run through numbers you mostly have access to already, via the release.

4:44 pm: Sorry, having tech problems. I believe that Pichette is telling callers that Google is seeing the same economic conditions “that you all are seeing.” Which is awfully vague. On to Arora to talk sales.

4:45 pm: Arora takes pains to refer to Android phones and tablets as a driver for mobile ad growth. Hrm.

4:50 pm: Okay, I think I have the call issue resolved. Now on to Wojcicki to talk up products.

4:53 pm: I always find this part of the call to have little value — anecdotal stories about products, without metrics that give observers much to go on — today Susan bought a latte with her Google Wallet, for instance.

This was the same under Jon Rosenberg. But Google must think there’s something of value here, right?

4:55 pm: Q&A

4:56 pm: Q: What is impact of new cool ads on financials? Also, you said Western Europe was soft — please elaborate.

A: Won’t talk about profitability, except that it’s good for users and advertisers. As far as Western Europe, that’s relative. Not that big a deal (so why bring it up?). “Slight softness, not weakness.”

4:57 pm: Q: Paid click growth is up sharply, but organic growth isn’t. What’s up? Also, what is “other” revenue which is up sharply?

A: Wojcicki: A change in the mix sometimes makes an impact. Pichette: “Other” boost comes from ITA acqusition.

4:59 pm: Q: On $2.5 billion in mobile — how much search versus display? And will you keep hiring at the same rate?

A: Page: Not gonna break it out. (No surprise.) On headcount: “We’re at the edge of what’s manageable for headcount growth.” But no guidance!

5:00 pm: Q: Please discuss strategy around video. (Yes. Please!)

A: Page: “We think of YouTube as tremendously successful” with a big opportunitity for growth. “Really blurs the lines” between UGC and pro content, and users happy to move between the two, don’t see the difference, and that’s been good for us. (In other words, I’m not gonna talk about $100 million channel strategy, and/or the pitch I just made for Hulu.)

5:02 pm: Q: Did mobile growth impact paid click growth?

A: Wojcicki: We won’t break out numbers. (They never do.)

[Think i missed one here.]

5:05 pm: Q: Can you talk about how you can defend Android with regard to patents?

A: Page: Lots of patent attacks, but, “We see absolutely no signs that that’s effective,” and we think that will alienate customers and partners.

[Sorry, doing some back channel stuff here.]

[Another missed Q.]

5:11 pm: Q: On Android: Some partners are now paying Microsoft license fees. Will you pick up some of that fee? Also, on Google Wallet: Is the long-term plan to partner with credit card networks, etc., to handle “heavy lifting,” or will you vertically integrate some of these tasks?

A: Page: “Rather than seeing Microsoft compete in the marketplace with their smartphones, they’ve resorted to legal measures.” I suspect that our partners are making good deals for themselves. “We see Android going gangbusters, and we don’t see anything that’s going to stop that.” (Which is pretty much a “no, we’re not,” but not exactly the same as one.)

[Missed Q about mobile ad plans]

5:16 pm: Q: Does Google want to own content?

A: Page: Won’t get into specifics, but we’ve been very successful for a long time without owning content.

5:17 pm: [Missed Q. Gar.]

5:18 pm: Q: You talked about mobile run rate. What’s display run rate and YouTube pricing trends?

A: Hohohohoho. “We had this extraordinary moment in mobile this quarter,” so we highlighted that, says Pichette. “But you shouldn’t expect us to give you more information in the future on them.” Same goes for YouTube, etc. “All I can tell you is this is really, really well-growing.”

Q: Could you do a cable-like video offering?

A: Page: Won’t talk about future plans. Vague discussion of creating products that help users, and helping content makers find users.

5:22 pm: Q: What is the financial impact of shutting 20 projects? And how many active Google+ users do you need to move financial numbers?

A: Great questions, says Page. And I won’t give you specific numbers on shutdown. On Google+: “We’re still very, very early … but on the other hand, I encourage you all to try out Google+.”

Another question asking for specific numbers, details. I’ll spare you the answer.

5:25 pm: Larry thanks us all for tuning in. And from my end, apologies for the scattershot nature of this one.

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