Google's (NASDAQ: GOOG ) earnings results are in, and they're not the prettiest. The company missed expectations by a wide margin and shares took a tumble. Whenever this happens, it's often wise to dig deeper and see if there's an underlying issue.
The disappointment
In the second quarter, Big G reported year over year revenue growth of 19% to $14.11 billion, which translated to a non-GAAP income of $3.23 billion, or $9.56 a share. Analysts were expecting Google to earn $10.78 a share on revenue of $14.42 billion. The culprit appears to be that Google's cost-per-click -- or CPC -- declined by 2% sequentially and 6% year over year, despite paid click volume rising by 23% year over year and 4% sequentially. This could indicate there's potentially a structural headwind that's driving down the CPC metric.
The dig
Whenever something earnings-related doesn't add up, the first place to look for answers is the conference call. Unfortunately, this is all that Patrick Pichette, Google's CFO, had to formally say on the matter: READ MORE
The disappointment
In the second quarter, Big G reported year over year revenue growth of 19% to $14.11 billion, which translated to a non-GAAP income of $3.23 billion, or $9.56 a share. Analysts were expecting Google to earn $10.78 a share on revenue of $14.42 billion. The culprit appears to be that Google's cost-per-click -- or CPC -- declined by 2% sequentially and 6% year over year, despite paid click volume rising by 23% year over year and 4% sequentially. This could indicate there's potentially a structural headwind that's driving down the CPC metric.
The dig
Whenever something earnings-related doesn't add up, the first place to look for answers is the conference call. Unfortunately, this is all that Patrick Pichette, Google's CFO, had to formally say on the matter: READ MORE
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