From DailyTech: Excluding its soon-to-be-departed money-losing smartphone brand -- Motorola Mobility -- Google Inc. (GOOG) posted a net profit of $3.45B USD (GAAP), up from $3.35B USD in Q1 2013. For the quarter Google pulled in revenue of $15.42B USD -- roughly $100M USD less than the $15.54 that Thomson Reuters I/B/E/S expected.
Google's "traffic acquisition costs" (TAC) -- money it shares with its partners including browser makers who use Google Search as their default search engine and internet sites that displays ads vended by Google's network -- rose to $3.23B USD from $2.96B USD in Q1 2013. But that number was better than it sounds as TAC accounted for only 23 percent of the revenue for the quarter, versus 25 percent a year prior.
Excluding those costs, Google had revenue of $12.2B USD -- less than the $12.3B USD that analysts surveyed by Bloomberg were expecting, on average.
One key trend that has Google shareholders concerned is a fall in revenue per click due to the fall in desktop clicks and explosion of mobile ad clicks. However, given that Google grew its ad clicks by a bullish 26 percent versus Q1 2013, the good news is that growth in click counts appears to be outpacing the fall in revenues for now.
So if it wasn't TAC or falling ad revenue, what did damage Google's revenue?
One hit came from stock-based compensation (SBC), which rose from $655M USD in Q1 2013 to $839M USD in Q1 2014. Google is wooing a lot of top talent, and stock options are a key incentive. Among its key hires last year included Blaise Agüera y Arcas, the genius behind Microsoft Corp.'s (MSFT) Photosynth, and Ray Kurzweil, a futurist inventor who is participating in Google's robotics project.
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