Google reported higher quarterly revenue and profit as rising online ad
volume offset a hit from the strong dollar, sending the Internet
company’s shares higher in after-hours trading.
Shares
of the world’s No. 1 Internet search engine rose after the results were
released, climbing 3.5 percent on Thursday to $577. While revenue and
profit missed the forecasts of Wall Street analysts, many investors had
been bracing for a weaker report, said BGC Financial analyst Colin
Gillis.
The company has faced challenges in mobile advertising and is running up more expenses as it invests in new businesses.
“The
concern was that the first quarter results could have been much worse,”
Gillis said. “There’s a certain degree of relief rally happening.”
Revenue
for the quarter that ended in March rose 12 percent to $17.26 billion,
from $15.42 billion a year earlier. Analysts on average had expected
revenue of $17.5 billion, according to Thomson Reuters I/B/E/S.
The rising dollar took a toll on results at Google, which generates about half of its revenue overseas.
“Excluding
the net impact of foreign currency headwinds, revenue grew a healthy 17
percent year on year,” Google Chief Financial Officer Patrick Pichette
said in a statement.
The
number of ads, or paid clicks, rose 13 percent, while the average price
of online ads, or “cost per click,” declined 7 percent.
Google’s
ad revenue has been pressured as more consumers access its online
services on mobiles devices such as smartphones and tablets, where ad
rates are typically lower. In a conference call, Pichette highlighted
mobile ads as a key source of revenue growth during the quarter. “We are
experiencing real strength in mobile search,” he said.
The
contribution of ad revenue from video platform YouTube “continues to
grow at a strong rate year-over year,” he added. Brands are embracing
YouTube’s TrueView service, where advertisers pay only when users opt
not to skip an ad, he said.
Google’s advertising sales in the first quarter rose 11 percent to $15.51 billion.
The
company, under increasing competition for mobile ad dollars from rivals
such as Facebook Inc, tweaked its algorithm for mobile searches on
Tuesday to favour sites that look good on smartphone screens.
Earlier this month, the European Union accused Google of abusing its dominance of Internet searches to push its own products.
Net
income rose to $3.59 billion, or $5.20 per share, from $3.45 billion,
or $5.04 per share. Excluding items, the company earned $6.57 per share,
just missing analysts’ forecast of $6.60.
Posted by : Gizmeon
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