Google’s new management seems to be delivering on its promises. The recently reported quarter saw revenue grow fastest since Q2 of 2008. The company maintained its lead in online search with a 65.5% of U.S. queries in June. Yahoo was a distant second with a 15.9% share. Apart from the U.S., Google’s reach in Europe is also growing. Google now controls 92% of the search engine market in the United Kingdom, reporting 1.5% growth over the last month. Yahoo commanded a mere 2.98% market share in the region. On the Continent, Google consistently reported over 90% market share. In France, they reported a 91% share, in Spain and Germany 93%, in Switzerland 94%, in Portugal 95%, and in the Netherlands, Poland, and Romania 96%. It is only in Russia and the Czech Republic where Google owns less than half of the search market. And it is not just the online search market: Google is performing strongly across all its initiatives.
Google’s (NASDAQ:GOOG) Q2 revenues grew 36% over the year to $6.92 billion compared to the market’s estimates of $6.55 billion. Google-owned sites accounted for 69% of revenue and grew 39% over the year. Google’s partner sites, which generated 28% of total revenue, saw an increase of 20%. The U.S. contributed 54% of revenue for the quarter. Aggregate paid clicks grew 18% over the year but recorded a 2% sequential decline. The average cost-per-click grew 12% over the year and 6% over the quarter. Google’s EPS of $8.74 was also ahead of the Street’s estimates of $7.84.
Google’s operating expenses continued to rise driven by the additional hiring during the quarter. Google added nearly 2,500 employees in the quarter and ended the period with a total of 28,768 employees. The company’s mobile and social media efforts are also pushing up operating expenses. Analysts project that Google will be spending over $200 million on their social media offering, of which nearly $100 million was spent the previous quarter.
Google finally released their social media offering, Google+. According to comScore, online users spent an average of 6.7 hours on Facebook last month, compared with 4.1 hours on Google, and Google is looking to counter this trend. Google+ lets users create groups of friends and even do a group chat. Since its recent limited test launch, Google+ has recorded over 10 million users who have shared more than one billion items. The number is still very small compared with Facebook’s 750 million users.
Google has also seen their investments in mobile business beginning to pay off. IDC’s research estimates that Google’s Android operating system will maintain its global lead this year with a 38.9% share of the smartphone market. Apple’s iOS is expected to command an 18.2% share during the year. During the quarter, Google reported Android platforms to have been activated on 135 million devices, compared with 100 million devices reported two months ago. The company estimates more than 550,000 new activations daily compared with 400,000 activations a month ago. Overall, there are more than 400 Android devices available worldwide across 231 network providers in 123 countries.
Additionally, Google is expanding the Android platform through Android market, expected to roll out in a few weeks. The marketplace will include book sales and video rentals. Through a free app, users will be able to rent movies from $1.99 and up from the Web, Android phone, or tablet and will be able to view them through streaming, downloading, or viewing offline. A similar app will be available for books.
While Google does not break up its revenue by business, analysts estimate that revenues from their mobile business will double or triple this year from the previous year’s run rate of more than $1 billion a year.
Google also continued acquiring smaller companies during the quarter. Most recently, they acquired DVR and CE Extender SageTV. SageTV’s software lets users run media centers for both video and audio playback and also enables users to watch TV on any connected device. Google will look to incorporating Sage’s assets to their Google TV offering. Last month, Google also acquired AdMeld, an advertising optimization platform, for $400 million and social data startup, PostRank, for an undisclosed amount. Admeld’s offering focuses on simplifying and enhancing online ads and will help Google expand their already robust advertising offering. Admeld will help Google’s multiple ad options ranging from text based ads to video ads run smoothly together by giving advertisers more flexibility in displaying and customizing their content.
Canada-based PostRank offers analytics services that help users track data on social media platforms, including Twitter, Digg, Delicious, and more. PostRank helps users to score posts in an RSS feed by the number of comments, inbound links, mentions on Twitter, saves on Delicious and other social media metrics. The acquisition will help Google with their social media growth plan. Earlier this quarter, they bought Sparkbuy, a site known to be working on creating “Kayak for consumer electronics.” Sparkbuy was in the beta testing phase of their website, which is expected to help users find the right consumer electronic product they need faster. Sparkbuy completed a $1 million round of funding in 2010. Google is expected to use Sparkbuy’s technology to help boost their product search.
To boost their mobile offerings, Google acquired TalkBin, a five-month-old start-up that offers a platform that lets customers give feedback to local businesses and lets businesses read and respond to that feedback through mobile and Web apps. Google also acquired PushLife, a Toronto-based entertainment startup for an estimated $25 million. PushLife’s tools let users port their iTunes and Windows Media player libraries over to other platforms such as the BlackBerry and Android.
Google’s stock is trading at $597.62 with a market capitalization of $193 billion. It touched a 52-week high of $642.96 earlier this year.