Google Stock Soars after Second Quarter Earnings Beat

Shares of Google Inc. (GOOG) were trading up +72.15 or +12.33 percent to $651.35 per share in Friday's premarket after the company announced better than expected results for its second quarter late yesterday. Google stock closed at $579.85 per share, up +19.63 or +3.5 percent in Thursday's regular trading session.

Founded in 1998 by Sergey Brin and Larry Page, Mountain View, California based Google Inc. is an international Internet corporation best known for its search engine.
The company has been aggressively expanding into other information technology fields through acquisitions. In January of 2014, Google acquired Nest, a company that makes home appliances that connect to the Internet. Google had previously bought DeepMind and military robotics company Boston Dynamics. Other acquisitions last year included Skybox Imaging, Dropcam and Postini. Google's largest source of profits comes from its AdWords online service. The service places ads at the end of Google's search results.

For the company's second quarter ended on June 30th, Google reported GAAP earnings of $3.9 billion or $6.43 per Class C capital stock share compared to $3.4 billion or $4.88 in the same period one year ago. On a non-GAAP basis, the company reported it had earned $6.99 per share. The analyst consensus was for the company to report non-GAAP earnings of $6.70 per share.

Second quarter revenue increased by +11 percent to $17.7 billion, with the exclusion of traffic acquisition costs - proceeds shared with companies that syndicate Google's search results - revenue came to $14.35 billion. Analysts expected the company to report revenue of $14.27 billion.

According to Google executives, the significant jump in revenue was in large part due to improvements in mobile search ads and an increase in advertising on Google's YouTube website. Paid clicks on Google's own websites increased +30 percent from the same quarter last year.

Ruth Porat, Google's Chief Financial Officer said in the company's press release that, "Our strong Q2 results reflect continued growth across the breadth of our products, most notably core search, where mobile stood out, as well as YouTube and programmatic advertising. We are focused every day on developing big new opportunities across a wide range of businesses. We will do so with great care regarding resource allocation. This is Google's first quarter with Ms. Porat as CFO.

Google reported that the strength of the U.S. Dollar cut quarterly revenue by as much as -$1.1 billion. With the exclusion of the effects of adverse currency translation, Google's revenue for the second quarter would have increased +18 percent.

Despite billions spent on acquisitions, research and data centers to support the company's existing businesses, Google has taken measures to reduce spending to bring down operating expenses. Operating expenses came to $6.4 billion in the second quarter, down slightly from the previous quarter.

Google stock will open well above the company's all-time closing high of $607.22 made in February of 2014. Whether the sharp rally will hold, or if the steep rise in the stock will attract sellers remains to be seen in this morning's regular trading session.

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Published on Jul 17, 2015
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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