Google Inc.’s third-quarter earnings demonstrated that the Internet search leader is capable of surpassing investors’ short-term expectations while still investing heavily in long-range projects.
Google reported a 32 percent jump in net income Thursday and provided the most persuasive evidence yet that its past investments are paying off, helping it diversify away from search advertising.
Wall Street was encouraged, and sent Google’s shares soaring 9 percent to $590.01 in extended trading after the release of results.
Text links placed above or alongside search results are still Google’s main source of revenue, but the company has laid out billions to beef up its ability to sell image-based “display” ads, ads inside Web videos and on mobile phones. The company paid $3.2 billion for DoubleClick, a display ad network, and $681 million for mobile-ad firm AdMob.
Executives indicated Thursday that display advertising accounted for nearly 10 percent of ad revenue in the quarter, and mobile advertising was almost 4 percent.
Both businesses are doing better than expected, said analyst Clayton Moran of The Benchmark Co.
Those successes could help calm investors worried about Google’s insistence on spending more despite ongoing pessimism about the economy. The Web search leader added 1,500 workers in the quarter, for a total of 3,500 new employees so far this year. Capital expenditures — what Google pays for data centers, servers and networking equipment to keep its growing number of Web services online — increased more than fourfold to $757 million from $186 million a year earlier.
“That obviously could be a concern for investors, but when you look at the performance of the business, the conclusion is that the investment’s worth it,” Moran said.
Google is known for making long-shot investments. This week, some of its oddest projects yet came to light: It’s dabbling in wind farms and computer-driven cars.
During a conference call with analysts, Google Chief Financial Officer Patrick Pichette left no doubt that such investments would continue, saying, “We’re on this growth agenda at full throttle.”
For July through September, Google’s net income rose to $2.2 billion, or $6.72 per share, from $1.6 billion, or $5.13 per share, a year earlier.
Excluding certain expenses, Google earned $7.64 a share, topping the $6.69 a share analysts expected.
Google’s tax rate was lower than usual in the quarter, which helped boost net income. But even without that boon, earnings would have beat expectations, Moran said.
Revenue rose 23 percent to $7.3 billion from $5.9 billion a year earlier. After subtracting commissions paid to its ad partners, Google’s revenue stood at $5.5 billion, about $200 million more than analysts predicted, according to a Thomson Reuters survey.
The company ended the quarter with about $33.4 billion in cash and marketable securities.
Google, which is based in Mountain View, Calif., said its average cost per click rose 3 percent from a year ago, meaning companies paid more to place ads. People clicked on ads 16 percent more than they did in the same period last year.
During a conference call with analysts, Google said sales of its display ads, which include those on YouTube, are on a pace that would translate to $2.5 billion annually. Its mobile advertising businesses are on pace to bring in $1 billion in revenue annually. The figures are the most specific Google has released about the two emerging businesses.
Before the release of results, its shares lost $2.37 to close at $540.93.
Utah Leaders and Locals Rally To Keep Sundance Film Festival In The State
With the 2025 Sundance Film Festival underway, Utah leaders, locals and longtime attendees are making a final push — one that could include paying millions of dollars — to keep the world-renowned film festival as its directors consider uprooting.
Thousands of festivalgoers affixed bright yellow stickers to their winter coats that read "Keep Sundance in Utah" in a last-ditch effort to convince festival leadership and state officials to keep it in Park City, its home of 41 years.
Gov. Spencer Cox said previously that Utah would not throw as much money at the festival as other states hoping to lure it away. Now his office is urging the Legislature to carve out $3 million for Sundance in the state budget, weeks before the independent film festival is expected to pick a home for the next decade.
It could retain a small presence in picturesque Park City and center itself in nearby Salt Lake City, or move to another finalist — Cincinnati, Ohio, or Boulder, Colorado — beginning in 2027.
"Sundance is Utah, and Utah is Sundance. You can't really separate those two," Cox said. "This is your home, and we desperately hope it will be your home forever."
Last year's festival generated about $132 million for the state of Utah, according to Sundance's 2024 economic impact report.
Festival Director Eugene Hernandez told reporters last week that they had not made a final decision. An announcement is expected this year by early spring.
Colorado is trying to further sweeten its offer. The state is considering legislation giving up to $34 million in tax incentives to film festivals like Sundance through 2036 — on top of the $1.5 million in funds already approved to lure the Utah festival to its neighboring... Read More