Google Grows Q1 Revenue 62 Percent, Expands More Globally

Google reported a killer Q1, posting net income of $592 million on revenues of $2.3 billion.

The net income figure, representing earnings per share of $1.95, was 62 percent higher than the year-ago period. Analysts had expected earnings per share, excluding stock-based compensation and other charges, to come in at $1.98, according to Thomson First Call. On that basis, Google reported earnings of $2.29 a share.

Google derives the lion’s share of its revenues from sales of its AdWords advertising product.

Executives said international sales growth was strong during the quarter, climbing from 38 percent to 42 percent of total sales. That growth was led by the opening of sales offices in Sweden, Norway and Denmark, they said, as well as strength in the travel and finance verticals in the U.K., Google’s bedrock market in Europe.

“Our international gains were very very strong this quarter,” said chairman and CEO Eric Schmidt. “Europe is doing much better for us. A whole bunch of changes in the way we work with our advertisers, as we did in the United States, are working very well.”

Google’s branded, CPM-based ad products have also made progress, according to SVP of Product Management Jonathan Rosenberg, though he hinted the prices they command hasn’t yet rivaled that of keyword-driven buys.

“We’re seeing a lot of progress, particularly with large brand advertisers, with site targeting,” he said. “The main customers who seem to be having the most success with it tend to be in the entertainment verticals. We’re just getting started there. The real challenge is, in the auction, [figuring out] the relative likelihood they’re going to be clicked on relative to small, targeted keywords.”

Rosenberg said the economics would need to be tweaked to “get the CPM stuff moving more aggressively.”

On the topic of running such branded ad placements on Google-owned Web sites, Larry Page said, “We don’t have any philosophical issues with regard to brand advertising on our own sites. Search itself may not be the optimal place for it, but we have many other types of properties now that [would be suitable].”

It was another busy quarter for Google development-wise. The company launched a calendar product, built a finance portal, added chat features to Gmail, and released a Web page creator. It also opened R&D centers in Moscow, Shanghai and Denmark, among other places, and won a bid to provide Wi-Fi Internet access to the city of San Francisco.

“We and everybody else in the world would be very excited to see good Internet access that is free and ad-supported and profitable,” said Page.

Unlike most other public companies, Google declines to provide guidance for future quarters or for the year ahead.

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