Google Inc. Failed to Meet Earnings and Revenue Estimate for 1QFY15

Google reported quarterly earnings on Thursday April 23 and fell short of revenue and earnings per share estimate by analysts.

Google Inc. reported its first quarter fiscal year 2015 earnings on Thursday April 23. The search engine giant advertising metrics and revenue failed to meet analyst’s expectation.

Google Inc. reported quarterly earnings of $6.57 per share more than prior year quarter earnings of $6.27 per share. The company also reported $17.26 billion of revenue versus the previous year quarter earnings of $15.42 billion. Analysts had forecasted the company to report earnings of around $6.60 per share on revenue of $17.50 billion, as per the consensus forecast from Thomas Reuters.

During after hour trading after the announcement of quarter results, the share of the company rose by over3.5%, and faltered a bit as traders processed the figures and following conference call with the officials.

The internet search engine giant said the quarter witnessed a 13% year over year increase in collective paid clicks falling short of analysts’ expectations of an increase of 14.8%, as per StreetAccount.

Google’s cumulative cost per clicks went down by 7% year over year, while only 1.9% decline was expected by StreetAccount consensus.

Robert Luna of Surevest Wealth Management told CNBC, “The pay-per-clicks decline was really a bit disappointing. I was hoping they would at least be able to maintain margins. We need to hear better numbers coming out of Google,”

During the earnings release, company executive stated that cost per click numbers would essentially be increasing unless for YouTube’s skippable TrueView ads.

Google pointed out that in part of foreign exchange, and said in its earnings release that revenue increased by a healthy 17% compared to prior year quarter, exclusive of foreign exchange impact. However, if the currency change is being considered, revenue grew by only 12% Y-o-Y.

Chief Financial Officer, Patrick Pichette said during the conference call, “This quarter, Google turned in a strong performance and this despite substantial currency headwinds“. He further said that strengthening US dollar caused adverse impact on $1.1 billion revenue in the quarter.

Advertising revenue of the company was disappointed as majority of its users access its services by using smartphones, where ad rates are much lower .

Google’s Chief Business Officer, Imid Kordestani said during th call that the modification to mobile provides a significant opportunity to Google, mentioning a figure that over 8 in 10 users of smartphones research about the product they want to buy.