Google Q3 2012 result analysis

Google has announced its Q3 results. It shows 45% growth y-o-y in Q3 and 14b in total revenue. This includes the Motorola revenue of 2.4b.

On the high level if we see it, this is a big revenue, but the in general, there is a drop in its growth %.  The revenue growth % in Q2 & Q3 2011 compared to previous year was 32.0% & 33.5% respectively where as in 2012 it came down to 21% and 18,5% (after removing the revenue from Motorola). This is the lowest growth % in Google's history (after going public). 

The Revenue growth is mainly due to the Motorola Acquisition.

In addition this is a consecutive second quarter Google closed the quarter with a drop in net profit (due to Motorola investment). The total cost and expenses are increased in Q3 2012. The increase is very high compared to Q3 2011. It increased from 6.662M in Q3 2011 to 11.365 M in Q3 2012. In percentage the increase is from 69% in Q3 2011 to 89% in Q3 2012.

The TAC (traffic acquisition cost) is increasing in the recent past. This has gone up by 1.8% y-o-y. Google has paid a big amount to keep the google.com as default search in IOS 6.

If the growth is in the same pace, the fourth quarter revenue is going to be 15b (12.4b+2.6b).

For the first time in Google's history, US revenue has reached 50% of the total revenue. This is mainly due to slow down in Europe. 

As per the Google CFO Mr. Patrick, there is a drop in the aggregate CPC. So customers are bidding lower in the third quarter compared to last year but the number of clicks is increased.

Our aggregate CPC or cost-per-click was down 15% and down 3% quarter-over-quarter.

In contrast to the above, we are facing increase in the CPC as the competitors are bidding high. May be this is in B2B market. As we enter into the fourth quarter, the CPC still increases as our competitors are desperate in acquiring more contact to get the max. revenue in the final quarter.