Google announced its Q4 and year 2008 earnings after the market closed on Thursday, and despite the recession, the search leader produced better-than-expected results.
Highlights of the results:
- Revenues of $5.70 billion for the Q4 2008 , up 18% compared to Q4 2007 and up 3% compared to the Q3 2008.
- Non-GAAP EPS of $5.10 vs. $4.95 EPS which, according to Thomson Reuters, analysts had been expecting.
- GAAP net income for the Q4 2008 was $382 million vs. $1.29 billion in Q3 2008. Non-GAAP net income in the Q4 2008 was $1.62 billion, vs. $1.56 billion in Q3 2008.
- They have a good pile of cash: as of 12/31/2008, cash, cash equivalents, and short-term marketable securities of $15.85 billion.
- Since Google stock has been hit pretty hard in the overall stock market downturn, Google said that it would allow employees with underwater options to exchange them. Google said this was an attempt to incentivize employees to remain with the company. Employees who choose this option must give up 12 months of vesting. Are they kidding, though? In this recession, why would you leave Google?
- The company added a total of only 99 employees to its workforce during Q4. Compare that to the first quarter of 2008, when Google added 2,351 employees (though about 1,500 of whom were from DoubleClick).
Google CEO Eric Schmidt said:
"Google performed well in the fourth quarter, despite an increasingly difficult economic environment. Search query growth was strong, revenues were up in most verticals, and we successfully contained costs. It's unclear how long the global downturn will last, but our focus remains on the long term, and we’ll continue to invest in Google's core search and ads business as well as in strategic growth areas such as display, mobile, and enterprise."
Hedging their bets due to the recession, but according to statements in the press release and on the earnings call, they feel they are well-equipped to outlast the recession. From the call:
- Aggregate paid clicks rose 18% from a year ago, and 10% from Q3.
- 85% of employees have at least some stock options that are underwater (hence the exchange plan)
- 800 free apps are now available in the Android Marketplace (compared to 15,000 paid / free apps in the iPhone's App Store)
- More than a million businesses are using Google Apps
- Non-Gaap operating margin was 36%
Google stock is up $3.42, about 1.13% at the time of this writing in after-market trading.
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