Google is out with their earnings for Q2 2014
Google Inc. reported consolidated revenues of $15.96 billion for the quarter ended June 30, 2014, an increase of 22% compared to the second quarter of 2013. Google Inc. reports advertising revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the second quarter of 2014, TAC totaled $3.29 billion, or 23% of advertising revenues.
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Q2 Financial Highlights
Revenues and other information - Google Inc. revenues for the quarter ended June 30, 2014 were $15.96 billion, representing a 22% increase over second quarter of 2013 revenues of $13.11 billion.
- Sites Revenues – Our sites generated revenues of $10.94 billion, or 69% of total revenues, in the second quarter of 2014. This represents a 23% increase over second quarter of 2013 sites revenues of $8.87 billion.
- Network Revenues – Our partner sites generated revenues of $3.42 billion, or 21% of total revenues, in the second quarter of 2014. This represents a 7% increase over second quarter of 2013 network revenues of $3.19 billion.
- Other Revenues – Other revenues were $1.60 billion, or 10% of total revenues, in the second quarter of 2014. This represents a 53% increase over second quarter of 2013 other revenues of $1.05 billion.
- International Revenues – Our revenues from outside of the United States totaled $9.33 billion, representing 58% of total revenues in the second quarter of 2014, compared to 57% in the first quarter of 2014 and 55% in the second quarter of 2013.
- Our revenues from the United Kingdom totaled $1.62 billion, representing 10% of total revenues in the second quarter of 2014, compared to 10% in the second quarter of 2013.
- Foreign Exchange Impact on Revenues – Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the first quarter of 2014 through the second quarter of 2014, our revenues in the second quarter of 2014 would have been $77 million lower. Excluding gains related to our foreign exchange risk management program, had foreign exchange rates remained constant from the second quarter of 2013 through the second quarter of 2014, our revenues in the second quarter of 2014 would have been $120 million lower.
- In the second quarter of 2014, we recognized a benefit of $6 million to revenues through our foreign exchange risk management program, compared to $35 million in the second quarter of 2013.
Reconciliations of our non-GAAP international revenues excluding the impact of foreign exchange and hedging to GAAP international revenues are included at the end of this release.
- Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our Network members, increased approximately 25% over the second quarter of 2013 and increased approximately 2% over the first quarter of 2014. Sites paid clicks, which include clicks related to ads we serve on Google owned and operated properties across different geographies and form factors including search, YouTube engagement ads like TrueView, and other owned and operated properties like Maps and Finance, increased approximately 33% over the second quarter of 2013 and increased approximately 6% over the first quarter of 2014. Network paid clicks, which include clicks related to ads served on non-Google properties participating in our AdSense for Search, AdSense for Content, and AdMob businesses, increased approximately 9% over the second quarter of 2013 and decreased approximately 5% over the first quarter of 2014.
- Cost-Per-Click – Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of our Network members, decreased approximately 6% over the second quarter of 2013 and remained constant from the first quarter of 2014. Cost-per-click for Google sites decreased approximately 7% over the second quarter of 2013 and decreased approximately 2% over the first quarter of 2014. Network cost-per-click decreased approximately 13% over the second quarter of 2013 and increased approximately 3% over the first quarter of 2014.
- TAC – Traffic acquisition costs, the portion of revenues shared with Google’s partners, increased to $3.29 billion in the second quarter of 2014, compared to $3.01 billion in the second quarter of 2013. TAC as a percentage of advertising revenues was 23% in the second quarter of 2014, compared to 25% in the second quarter of 2013.
The majority of TAC is related to amounts ultimately paid to our Network members, which totaled $2.40 billion in the second quarter of 2014. TAC also includes amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $893 million in the second quarter of 2014.
Other Cost of Revenues – Other cost of revenues, which is comprised primarily of data centers operational expenses, hardware inventory costs, amortization of acquisition-related intangible assets, and content acquisition costs, increased to $2.82 billion, or 18% of revenues, in the second quarter of 2014, compared to $2.18 billion, or 17% of revenues, in the second quarter of 2013.
Operating Expenses – Operating expenses, other than cost of revenues, were $5.58 billion in the second quarter of 2014, or 35% of revenues, compared to $4.45 billion in the second quarter of 2013, or 34% of revenues.
