Google has always performed admirably in the fourth quarter, so in many ways this isn't a surprise. What's far more interesting are the tiny figures that tell big stories about the big picture.
Let's dive in.
It's the economy, stupid. And it's doing better than you thought. When economic turmoil is afoot, one industry that gets hit hard is display advertising--which happens to make up the lion's share of Google's revenue. In the wake of the 2008 crisis, this sector quickly went off a cliff. As we enter 2013, we're seeing stability--good news for Google, yes, but also its biggest customers: the University of Phoenix, Ask.com, Amazon.com, Zappos.com, Hotels.com, Geico, State Farm, Expedia and Lowe's, per 3Q12 data.
The Google economy is getting more efficient. The average cost per click decreased about 6 percent compared to the same quarter a year ago, even as impressions increase. That means the company is driving more value for every customer dollar spent--"more bang for your buck," if I may. Ah, the benefits of scale!
Google is getting more expensive to run. Ah, the drawbacks of scale! In Q4, Google tallied capital expenditures of $1.02 billion, the majority of which was for production equipment, data center construction and facilities-related purchases. The company expects "to continue to make significant capital expenditures," too--a hint that it's competing with Amazon and Facebook in infrastructure. Does the cloud have a price? Oh, you betcha.
Is Google American? Depends on how you look at it. Fifty four percent of the company's revenues come from outside the US. That's barely an increase from the same quarter a year ago and just a few percentage points more than the same quarter five years ago (48 percent), but it still gives you a sense of the company's overseas exposure, even as the pie expands dramatically. (4Q07 international revenue: $2.32 billion. 4Q12 international revenue: $6.9 billion.)
Google is massive. More than 16,800 people work for the company, and it's sitting on $14.2 billion in cash. That's one Instagram for each board member, if it wanted. Any questions?
Curious what the company's executives said on the earnings call? Stay tuned--Rachel King will have a write-up shortly.