Online search engine and enterprise software major Google said it third quarter revenues increased 12 percent to $14.89 billion.
But Google’s main worry is about cost-per-click that decreased approximately 8 percent over the third quarter of 2012 and decreased approximately 4 percent over the second quarter of 2013. Internet users continue to shift towards using mobile devices like tablet PCs and smart phones, where advertising is less expensive because screen sizes are smaller.
Google segment revenues (excluding Motorola) rose 19 percent to $13.77 billion, or 92 percent of consolidated revenues.
The United States revenue contribution increased to 56 percent to $7.67 billion from 53 percent.
You may read Google Q3 financial result
The revenue contribution from the United Kingdom decreased to 10 percent to $1.39 billion from 11 percent.
Google does not share revenue details about other regions.
Aggregate paid clicks increased approximately 26 percent.
Google quarterly profit rose to nearly $3 billion from $2.2 billion.
Motorola Mobile segment revenues were $1.18 billion, or 8 percent of consolidated revenues in the third quarter of 2013, compared to $1.78 billion, or 13 percent of consolidated revenues in the third quarter of 2012.
Motorola Mobile segment operating loss in the third quarter of 2013 was $248 million, or -21 percent of Motorola Mobile segment revenues. This compares to segment operating loss of $192 million, or -11 percent of Motorola Mobile segment revenues in the third quarter of 2012.
Google employed 46,421 employees (42,162 in Google and 4,259 in Motorola Mobile) as of September 30, 2013, compared to 44,777 employees (40,178 in Google and 4,599 Motorola Mobile) as of June 30, 2013.
Google will continue to expand its mobile business to support its core advertising and search segments in 4Q13, said Eric Costa, analyst in TBR’s Networking and Mobility Practice, Technology Business Research.
Google reported improved margins across the board including a 450 basis point increase in net margin year-to-year in 3Q13 due to revenue growth and reduced costs due to the broad restructuring of Motorola Mobile. Growth from its core businesses will continue to drive overall growth in 4Q13, backed by its search and advertising segments, along with continued growth in mobile. In addition, success in the hardware and digital content segments will drive future revenue growth and increase the number of devices from which Google can garner ad revenue.
The company will continue to focus on investing in products that indirectly bolster advertising revenue, the primary source of Google’s total revenue. Boosting Internet speeds with Google Fiber and growing the base of global Internet users will increase ad views and Google’s top-line revenue.
Chromecast is being rapidly adopted and helping integrate the multiscreen strategy with its seamless transition across devices
The July launch of Chromecast, a two-inch dongle which plugs into TV HDMI ports, in addition to its Google Play service, reinforced the company’s ambition to gain a greater footing amongst the OTT market as customers migrate away from selecting traditional cable packages to a more à la carte approach to viewing programming.
In efforts for the device to be better perceived as an alternative to traditional cable, TBR anticipates Google will pursue partnerships with networks, which will allow Chromecast to broadcast live programming, such as sports.
Chromecast requires Wi-Fi connectivity and allows users to view videos and internet content transmitted from their laptops, tablets and smartphones. The device costs $35 and is compatible with PCs along with Apple and Android products. TBR believes this product will continue to be rapidly adopted in 4Q13, and will help drive Google’s multiscreen strategy as users can easily navigate the product across different devices.
Google continues to shape YouTube toward the mobile device segment
YouTube continued to experience strong growth for Google in 3Q13, yet the traffic is shifting from PCs over to mobile devices. Mobile devices now comprise over 40 percent of total YouTube traffic, up from 6 percent in 3Q12. This shift toward mobile is opening up additional ad revenue possibilities for Google as people continue to use an increased number of personal devices. Video adds increased over 75 percent year-to-year in 3Q13 led by TrueView, Google’s video ads that allow the viewer to choose which ad content to watch. TBR expects mobile traffic to make up close to 65 percent of YouTube traffic by 2015.
To improve the mobile YouTube experience, Google has been investing in its YouTube Apps, including the ability to now multitask while watching a YouTube video at the bottom of your mobile device.