Google Q1 Sales Surpass Analyst Estimates

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Beating analysts' estimates, Google said sales surged to $3.66 billion for Q1 2007. The company pointed to strength of its core business, search and advertising, as well as growth in international operations.

Google touted an increase in revenues of 63 percent over first quarter of 2006 and 14 percent over Q4 '06. Profit rose 69 percent to $1 billion, or $3.18 a share, from $592.3 million, or $1.95 a share, last year, Google said today in a statement.

"Our core business is driving our success," said Google CEO Eric Schmidt. The prowess of its search ad business, he added, "continues to let us take calculated risks in new markets...and extend our business to new platforms and formats." Schmidt was also elected chairman of the board.

Despite displaying fewer ads, Google-owned site revenue rose 76 percent over first quarter '06 to $2.28 billion, or 62 percent of total sales. AdSense partner sites brought in $1.35 billion, while revenue from outside the U.S. totaled $1.71 billion.

Company execs said AdSense and AdWords ads have become better targeted, driving higher prices and click-through rates. The firm reported paid clicks on Google and its AdSense partner sites rose 52 percent over Q1 of last year.

In the first quarter of 2007, Traffic Acquisition Costs totaled $1.13 billion, or 31 percent of ad revenues. Those costs consisted of payments to AdSense partners of $1.05 billion, and dollars paid to distribution partners of about $73 million.

In addition to alluding to the growth of YouTube, and relationships with content partners like the BBC, Google execs referred to its recent partnerships with traditional media outlets and acquisition of ad management firm DoubleClick as driving efficiency for advertisers.

Earlier this week, Google announced a deal with Clear Channel Radio, enabling it to sell a guaranteed portion of spot ad inventory on more than 675 stations, including some in major markets such as Los Angeles and New York.

The Clear Channel deal "opens up a lot of great inventory to our advertisers," said Google President, Technology Sergey Brin during today's earnings conference call.

Google's acquisition of ad platform giant DoubleClick for $3.1 billion last week continues to reverberate across the Internet industry, spurring prognostications of demise or repositioning of the firms' competitors, as well as cries of monopolization from Microsoft and others. The Redmond, Washington giant, not a stranger to similar criticisms, was rumored to be in talks to buy DoubleClick before Google pounced.