Google reported revenues of $3.87 billion for the quarter ended June 30, 2007, an increase of 58 percent compared to the second quarter of 2006 and an increase of six percent compared to the first quarter of 2007.

Published: 22 Jul 2007

Google reported revenues of $3.87 billion for the quarter ended June 30, 2007, an increase of 58 percent compared to the second quarter of 2006 and an increase of six percent compared to the first quarter of 2007.

GAAP net income for the second quarter of 2007 was $925 million as compared to $1.0 billion in the first quarter of 2007.

Revenues from outside of the United States totaled $1.84 billion, representing 48 percent of total revenues in the second quarter of 2007, compared to 42 percent in the second quarter of 2006 and 47 percent in the first quarter of 2007.

Revenues from the United Kingdom totaled $600 million, representing 15 percent of revenue in the second quarter of 2007, compared to 15 percent in the second quarter of 2006 and 16 percent in the first quarter of 2007.

“Our performance once again demonstrates the strength of our core search and ads business. The growth in our global traffic combined with our ongoing improvements in monetisation resulted in solid revenue growth, even in a seasonally slow quarter,” said Eric Schmidt, CEO of Google.

“We continue to expand our commitment to deliver compelling hosted applications to businesses of all sizes, most recently agreeing to acquire Postini and its robust set of tools for web communication for the Google Apps suite of products. At the same time, we remain focused on addressing the tremendous opportunities we see worldwide, adding the talent and building the infrastructure that will allow us to continue to provide rich user experiences to Google users around the world,” said Schmidt.

Schmidt reportedly admitted “we overspent against our own plan on headcount” but was unapologetic about Google’s need to hire the best people.

“We decided it was not a mistake,” he said. “The kind of people we brought in were so good that we're glad we did this.”

The highlights were as follows:

Google Sites Revenues - Google-owned sites generated revenues of $2.49 billion, or 64 percent of total revenues, in the second quarter of 2007.

Google Network Revenues – Google’s partner sites generated revenues, through AdSense programs, of $1.35 billion, or 35 percent of total revenues, in the second quarter of 2007.

Paid Clicks – Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 47 percent over the second quarter of 2006 and remained approximately the same as the first quarter of 2007.

TAC - Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, increased to $1.15 billion in the second quarter of 2007. This compares to TAC of $1.13 billion in the first quarter of 2007. TAC as a percentage of advertising revenues was 30 percent in the second quarter, compared to 31 percent in the first quarter of 2007.

The majority of TAC expense is related to amounts ultimately paid to our AdSense partners, which totaled $1.06 billion in the second quarter of 2007. TAC is also related to amounts ultimately paid to certain distribution partners and others who direct traffic to our website, which totaled $87 million in the second quarter of 2007.