Google Revenue To Hit $70.4B In 2014, Equity Firm Estimates
If Google remains on track in 2014, one investment firm estimates the company could earn $70.4 billion in total revenue, up from (unaudited) $59.8 billion in 2013. That's assuming the "Google segment" makes up 93% of its total revenue for the year.
Why should that matter to search marketers? The company invests a portion of that revenue into other projects, as well as tools to support its ad network. Google expects its cost of revenue, research and development expenses, sales and marketing expenses, and general and administrative expenses to increase in dollars -- and possibly to increase as a percentage of revenue, per the company's most recent SEC 10-K filing.
"Our research and development expenses were $5.2 billion, $6.8 billion, and $8.0 billion in 2011, 2012, and 2013, respectively, which included stock-based compensation expense of $1.1 billion, $1.3 billion, and $1.7 billion, respectively. We expect to continue to invest in building the employee and systems infrastructure needed to support the development of new products and services and to improve existing ones," according to the filing.
Take the estimate with a grain of salt, especially because the Ivy Capital contributor chose to write the post anonymously. Ivy Capital, described as a long-only equities fund, has been around since 2002.
The contributor admits that while the methodology is rough, the result is in line with Google's ad revenue growth trend of the past few years. Since a man's picture appears next to the column, we'll call the contributor a "he." He acknowledges that the majority of Google's revenue has come from its advertising business, but I believe that over time that will change somewhat and level out to include cloud computing, revenue from patent licensing, and more.
"Google's 10-K, 85% of its 2013 revenues came from advertising (10-K, p. 27), which includes ads for both its search and YouTube businesses, as well as ads placed on Google member sites," he writes. "The dominant role of advertising in Google's sales does provide some basis for making a rough prediction about the company's overall revenues for 2014."
The contributor takes us through the revenue model here.