Let’s be honest: Google’s revenues are still increasing

By on April 22, 2014

Revenues may not be what shareholders had hoped, but a company that posts multi-billion dollar quarterly profits isn’t exactly in turmoil.

When you’ve been one of the world’s fastest growing companies for almost 20 years, at some point you will start to disappoint your shareholders. Step forward Google, which posted first quarter revenues of R162 billion. Year-on-year, that’s still an increase of 19 percent – but it was lower than the R163 billion analysts had been expecting. Gasp. As a result, shares dropped 3.15 percent in after-hours trading.

Profits were, admittedly, less impressive: They grew by a mere 2.9 percent to R36 billion.

Investors were keenest to see what had been going on under its bonnet: While the number of paid clicks rose by just over a quarter year-on-year, cost per click was down nine percent. It still forms 90 percent of revenue – but shareholders were clearly worried.

The rest of its revenue comes from a category helpfully named ‘other’, which includes sales of hardware like Chromecast, and the cut it takes when it sells apps or songs or videos in its Play store. Revenues from those rose by R5.2 billion to R16 billion during the quarter.

This was also investors’ chance to make their approval or disapproval known of Google’s new strategy of acquiring absolutely everything in the world, ever. Significant acquisitions over the past few months have included drone maker Titan Aerospace, plus the R33.6 billion it spent on home-connected devices maker Nest. It is also testing out driverless cars, wearable tech and military robots.

Is it trying to create a robot army bent on conquering the earth and enslaving humanity? German newspaper baron Matthias Döpfner, owner of Bild, Germany’s biggest selling newspaper, is worried. He has published an open letter accusing the company of building a digital superstate, saying the fact that it penalises competitors in its search rankings suggests its motto is less ‘don’t be evil’ and more ‘if you don’t want us to finish you off, you better pay’.

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