Google reported third-quarter revenue of $16.52 billion, up from $13.75 billion in the year-ago period.
However, the company revealed somewhat slow advertising growth, and a surge in expenses.
Despite revenue increasing year-on-year, its third quarter revenue (which grew by 20 percent) failed to meet Wall Street expectations. Google’s total number of paid ad clicks increased by 17 percent year-over-year, however, it was down from the 25 percent growth that the company reported in the second quarter.
Google’s online advertising rates have experienced years of decline, moderating a little in the third quarter, falling by 2 percent year-over-year, compared to the 6 percent decline reported in the second quarter. Online advertising refers to placing promotional material on websites, mobile apps, emails, social media sites, etc.
A poll by Thomson Reuters I/B/E/S found that analysts had forecast revenue, of at least $16.57 billion, in the third quarter.
Shares of the company fell by 2.7 percent down to $510.11 in extended trading on Thursday.
What’s next for Google?
After it reported its Q3 earnings Google had a conference call with analysts. Questions came pouring in.
A major concern among analysts is Google’s cost per click – the price that is paid for every ad a user clicks.
Over the past several years the cost-per-click measurement has dropped, mainly because people are using their mobile phones to search the web, and it is much harder to place ads that people will actually click on when using such a small screen.
Google executives have pointed out that mobile advertising is relatively new, which suggests that they are still working on ways to improve mobile ad performance. According to the research firm eMarketer, mobile advertising represents approximately 11 percent of ad spending in the United States.
Omid Kordestani, Google’s chief business officer, said “I think we just need to keep innovating and experimenting here to get it right,”
The company said that “other revenue,” now represents a large portion of earnings. This is mainly driven by Google’s Play Store, with revenue increasing by 50 percent from the same quarter of last year, up to $1.8 billion.
