Search giant Google (GOOG) delivered results for the second quarter of 2011 that were much better than expected.
Revenue after traffic acquisition costs rose 36% year-over-year to $6.92 billion, beating the Zacks Consensus Estimate of $6.61 billion. Revenue at Google-owned sites, which accounted for 69% of total revenue, surged 39%. Google’s partner sites, which generated 28% of total revenue, saw an increase of 20%.
Approximately 54% of revenue came from outside of the U.S.
Aggregate paid clicks increased 18% year-over-year but fell 2% from the previous quarter. Average cost-per-click rose 12% year-over-year and 6% from the first quarter of 2011. Traffic acquisition costs fell as a percentage of advertising revenue from 26% to 24%.
Meanwhile, adjusted operating income rose 24% year-over-year to $3.32 billion. The operating margin was a very solid 36.7% of total revenue. This number declined, however, from 39.2% in the same quarter in 2010.
Non-GAAP earnings per share was $8.74, a 36% increase year-over-year.
Free cash flow in the quarter was a stellar $2.6 billion. Google had a whopping $39.1 billion in cash, cash equivalents, and marketable securities as of June 30. Its employee headcount jumped 9% quarter-over-quarter to 28,768 full-time employees.
After falling for several weeks, consensus estimates reversed their trend in the last few days and began to rise heading into the number, which is usually a bullish sign.
Expect analysts to revise their estimates significantly higher for Google over the coming days. Shares are up more than 10% after hours.
We’ll have more on this quarterly report coming up…
Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research.
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