Search giant Google (GOOG) delivered much better than expected results for the second quarter of 2011.
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. An in-depth preview of Google's second quarter earnings was highlighted by Senior Stock Strategist Kevin Cook on Tuesday (click here to view the article).
Expect analysts to revise their estimates significantly higher for Google over the coming days. Shares are up more than 10% after hours.
Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research.
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