Google reports Q4 and 2009 earnings after the bell.Google sent a strong signal Thursday that the advertising industry has begun to rebound.
The Mountain View, Calif. company reported revenue rose 17% to $6.67 billion for the quarter ended Dec. 31, 2009, compared with the year-ago quarter. Fourth-quarter net income reached $1.97 billion, or $6.13 per share -- up from $382 million, or $1.21 per share, compared with the same quarter last year.
"We're back in business, full blast," Google Chief Executive Officer Eric Schmidt told analysts and investors during the earnings conference call.
Revenue from partner sites rose 21% in the quarter compared with the prior year, generating revenue through AdSense programs of $2.04 billion, or 31% of total revenue. Similarly, revenue from Google-owned sites rose 16% from the prior year, generating revenue of $4.42 billion, or 66% of total revenue.
Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 9% sequentially, and 13% compared with the fourth quarter in 2008.
Revenue from the average cost-per-click (CPC) ad, which includes clicks related to ads served on Google sites and the sites of our AdSense partners, rose 2% sequentially, and 5% compared with the year-ago quarter.
Operating expenses -- other than cost of revenue -- were $1.78 billion in the fourth quarter or 27% of revenue, compared to $1.65 billion in the fourth quarter of 2008 or 29% of revenue.
While Google didn't break out revenue from China, a country that has caused major controversy for the search engine of late, gains from international operations reached $3.52 billion. It represents 53% of total revenue in the fourth quarter of 2009, compared with 53% in the third quarter of 2009, and 50% in the fourth quarter of 2008.
It's not entirely unexpected for advertisers to see Google deliver a solid fourth quarter. Retailers and shoppers turned out in droves for the holiday season, according to Kevin Lee, chief executive officer at Didit. Some retail clients more than doubled the amount spent on ads in December compared with October.
"As a public company, however, Google faces a challenge given the Street's expectations, which has always been high," Lee says. "If the stock doesn't move up, that translates into a morale problem for many recent employees whose options are either underwater or treading water."
While paid search will probably continue to grow as marketers realize how "indispensable" clicks from Google are to increase their business, Lee believes the company needs more.
Take mobile, for example. For mobile to become the next market driver, consumers in greater numbers will need to adopt smartphones, such as Nexus One, along with other phones running Android.