Google's growth continues

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Google posted positive first quarter (Q1) 2008 results late yesterday that beat expectations and increased revenue by 42 per cent compared with the same quarter last year.

The company generated $5.19 billion (£2.6 billion) revenue in the period ending 31 March and net income of $1.31 billion (£658 million) or $4.12 (£2.07) per share, compared with $1 billion (£503 million), or $3.18 (£1.60) per share, in Q1 2007.

Financial analyst Thomson Financial had forecast revenue of $3.608 billion (£1.8 billion), excluding the advertising commission paid to websites that run its ads. But Google beat this forecast, reporting $3.7 billion (£1.86 billion) in equivalent revenue.

Despite some doubts over its ability to continue to grow revenues through its pay-per-click advertising in the face of growing competition from the likes of Yahoo, Google said this part of its business grew 20 per cent year-on-year.

According to internet audience ratings analyst comScore among others, Google's paid-click growth rate slowed in the US during January, February and March.

But during a conference call with analysts, Google chairman chief executive, Eric Schmidt said fewer, better targeted ads had helped sustain growth. "Paid-click growth was much higher than has been speculated by third parties," he said.

"In search, we continue to invest in quality, particularly internationally, and quality improvements lead to increased traffic and share," he added. Meanwhile, Google co-founder and technology president Sergey Brin said it had rolled out 100 improvements to its core search engine during Q1.

Schmidt also said the company was beginning to reap the rewards of a three-pronged strategy to develop its applications and search businesses alongside its paid-click advertising, while also restating his views outlined at the last quarter's results call that the US economic downturn was having little impact.

Google's acquisition of DoubleClick also featured high on the agenda of its executives. "DoubleClick is hugely strategic for us. It allows us to offer a much more comprehensive solution for advertisers and publishers," said Schmidt.

And YouTube figured in its strategy to become "the world's largest display ad provider," according to Jonathan Rosenberg, Google senior vice president of product management.

The company's Q1 results included those of the newly acquired internet advertising software company from the point when the deal closed on 11 March until the end of the period. But Google said this had minimal affect on revenue and was "only slightly dilutive" to net income and earnings per share.

Schmidt also commented on Yahoo's announcement last week that it would trial Google search ads in what some observers have said is a move on the part of Yahoo intended to stave off Microsoft's advances.

"We're very excited to be participating in this test," he said. "I don't think it's really appropriate to speculate beyond that, but it's nice to be working with Yahoo and we like them very much."

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