Google reported a 110 percent rise in quarterly profits today, demonstrating that the company evaded the slow growth trend that has stymied Yahoo and eBay.
Second-quarter net income rose to $721 million compared with 2Q05’s $343 million. Revenue rose 77 percent to $2.46 billion, above expectations.
Google executives said they were very pleased with their performance in what is typically a slow quarter.
“You’re going to see more and more international expansion,” said Google CEO Eric Schmidt, noting that several products like Google Talk and Google News are available in multiple languages.
Schmidt said the company is also concentrating on making Google device independent. The company is currently testing mobile ads in Japan, and plans to expand those ads into different countries later this year.
Google executives fielded several questions about rumored Google products.
Google execs said that dMarc’s personnel is now fully integrated, and that the company is currently testing radio ads not just in the U.S. but internationally.
As for the Google Health rumors, Google execs said they were experimenting with health-related initiatives and learning from Google Co-Op, but they implied that no new products were slated for immediate release.
Responding to questions about Google’s viability in the face of a nationwide or global economic slowdown, Schmidt said that he would expect Google to do very well. He based his speculation on post-9/11 experience, during which time advertisers accelerated adoption with Google.
Asked about the net neutrality debate, Google co-founder Sergei Brin said that Google cares about net neutrality because of how it affects smaller sites.
“People don’t believe us when we say this, but we care about net neutrality not for Google as a company but for all the little companies,” said Brin. “I don’t see it so much as us being affected, but rather all those other Internet sites. Being a search company, we really care about them.”
Questions and Answers (paraphrased)
A full transcript of the call is available here.
Relevance of search in international, and what’s driving U.S. growth rate?
The quality in coverage of Europe is similar to U.S. The brand is strong. There’s not much difference in user behavior. The ad biz is also strong.
Can Google Checkout be profitable as a stand-alone business, or is the connection with AdWords what makes it financially compelling? Material increase in ad buyer budgets?
Early to comment on that. We simply want to mke the process of buying quicker, more fool proof. We think that will ultimately create value for the advertiser, and we benefit indirectly. Goal is to increase searches on Google, click throughs to advertisers, and conversions.
We’re busy fine-tuning the ad network. The most extreme form of verticals is specialized sites like Google Finance. It should be the case that the ads will have greater value in those verticals. It’s end user value targeting the ads running these experiements.
Running a lot of tests with different advertisers and partners, including click to play video ads. With AOL we have a long list of milestones and projects. We’re on track.
Video be pay per performance?
Probably use our existing models, but we’re open.
Revenue share philosophy with partners? Quantitative comments on rate/degree growth with video?
Typically given majority of value to the partner who brings the end user. Majority of revenue goes to companies like AOL and Ask Jeeves. Google.com gets that benefit. Similar arrangement with Dell after testing. Their end users would benefit from access to Google. Good business for both. Answer depends on the kind of partnership. All have some form of financial sharing, but maybe not revenue…we either do a content deal or an advertising deal or a hybrid.
Yahoo’s affiliate clearing announcement, how it affects your landing page score? dMarc?
Ads quality: Quality has been our hallmark. Beginning in end 2005 we noticed landing pages were lowering in quality. Incorporated a landing page score. We made a change this month, we think the impact has been beneficial to users. We expect to keep evolving the quality signal. dMarc: We’re in the process of introducing adSense for radio. The dMarc team is fully integarted. It’s worldwide, not just U.S. 3 months integration schedule.
Interest in health care field?
Sergei: We got an interest in health care because there’s been so many orgs that have approached us. How our tech could be used to help. The first thing we’ve done was part of the launch of Google co-op where we improved the quality of our health search. We partnered to help us annotate and draw people to more authoritative sources. Just improve the search. I think that’s a great product. More broadly, we’ve seen that health information has a lot of similarities to a lot of the challenges we deal with in terms of textual information. We want to make sure that we’re able to contribute our tech to solve those problems. We don’t have a specific plan as of yet, but we’re exploring several areas.
Embedding of conversion data into ranking algorithms. Desire to develop a CPA product? Pay per call?
The search results are not affected by the advertising business. Separate businesses. On the conversion side: conversion tracking feature in adWords and Google Analytics. Pay per call, very exciting. A lot of businesses that don’t have a need for sophisticated Web sites and rely on phone calls to drive leads. Doing a small test on that. Conversion data is not affecting ranking.
Still gaining market share and why? International, two big markets, China and Russia, where you’re not #1. Local competition like this elsewhere, and how will you deal with this?
Market share: Our internal stats differ from external estimates. We need local engineering talent and innovation. Opened an engineering office in Moscow. Competition with Yandex.ru.
To what degree is Checkout a step toward a search-based transactional model?
An intersting idea, but it’s not there today. It’s a mechanism to quicken checkout. No plans to use checkout information for anything outside checkout. Lots of safeguards for users.
Economic slowdown, what if?
Pure speculation. After 9/11 we were worried that people would stop spending, but they accelerated their transition to Google. Why? Because they focus on the economics. In a theoretical global recession, I’m sure we would benefit.
Net neutrality status? Modeling or analysis?
Sergei: People don’t believe us when we say this, but we care about NN not for Google as a company but for all the little companies. In 98, 99, fairness of the Internet allowed us to build the company. Today we have resources at our disposal. I don’t see it so much as us being affected, but rather all those other Internet sites. Being a search company, we really care about them.
Larry: We have a blessing with the Internet, this amazing thing where you can connect to any country or Web site and it works pretty well. There’s an expectation…you do a good as job as possible. People have been saying the Internet would melt down for 10 years, but it hasn’t. We deliver a lot of video, and we don’t see any issues. We think the Internet will continue to grow tremendously.
New advertising platforms you may be working on?
Smaller advertisers, pay per cal makes a lot of sense. We’ve launched several improvements to make it easy for advertisers to figure out which keywords to use. We’ll be increasing ad types and placement areas for advertisers. Advertisers have mor