Earnings Reports Show Search’s Strength in Tough Economy


Posted by Dan Malachowski, Product Marketing Manager (Search and Performance Media)

Google and Yahoo! beat analyst expectations last quarter (October-December 2008) and Microsoft fell just short.  These earnings reports give us some insight into the strength of search from October through December 2008, even though the economy was reeling.  Year-over-year revenue increased 18% for Google and stayed flat for Microsoft’s Online Services Division, while Owned and Operated search revenue was up 11% year-over-year for Yahoo!.  Google also saw an 18% increase in paid clicks, while Yahoo! noted that query volume was up 10% and Revenue Per Search was up in the single digits.  High costs hurt net income for everyone, but the reports show that in terms of revenue, search was strong.

Highlights:

Google

·         Q4 earnings report was mostly positive

·         Google reported revenues of 5.7 billion (October to December 2008), an 18% increase over the same period last year and a 3% increase over Q3

·         50% of this revenue was international

·         Aggregate paid clicks (Google.com and content network) increased 18% year over year

·         Net income was $382 million as compared to $1.29 billion in the third quarter of 2008

·         Google’s net income was negatively affected by employee stock compensation costs and their declining investments in Clearwire and AOL

·         Earnings per share of $5.10 beat analyst estimates by 15 cents despite the downturn in the Internet advertising market

·         Google had 20,222 full-time employees at the end of Q4, up from 20,123 at the end of Q3
Full report

Microsoft

·         Microsoft reported revenues of $16.63 billion (October to December 2008), a 2% increase over the same period last year

·         The weakest performing Microsoft division was Online Services

·         Online Services had revenue of $866 million (flat year over year) but took an overall loss of $471 million (nearly twice the loss of the same quarter last year)

·         The loss widened because of the $137 million cost of paying people back for Live Search Cashback purchases

·         Earnings per share of 47 cents missed analyst estimates by 2 cents

·         Microsoft announced that they are cutting 5,000 jobs over the next 18 months, including 1,400 last week
Full report

Yahoo!

·         Yahoo! earnings were better than expected

·         Yahoo! reported revenue of 1.8 billion for Q4 2008, a 1% decrease year over year

·         They had a net loss of $303 million (22 cents per share) but beat analyst expectations

·         Yahoo! pageviews were up 15% in Q4

·         Owned and Operated search revenue was $436 million, up 11% year over year

·         Query volume was up 10% and Revenue Per Search (RPS) was up in the mid-single digits, but they didn’t give an exact number

·         Yahoo! now has 13,600 employees
Full report


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