Quarterly revenues were up 22% on Q3, and up 86% on the same period in 2004, reaching $1.92bn. For the full year, revenues - of which 99% comes from advertising - were up 92%, reaching a staggering $6.14bn.
Considerable global expansion efforts during the year saw operating expenses grow ahead of expectations by 42% to $1.55bn. Despite this, the company reported full-year operating profits that were up by 88% on 2004 at $2.02bn. Google's enterprise software licensing business, while still accounting for only 1% of the company's overall business in 2005, grew by 60% over the previous year.
Revenues from outside the US grew faster than overall revenues, going up to 39% of the total compared to 34% in the previous year.
Richard Holway, Director at Ovum Research, comments:
"It requires a double take when a company that has just reported Q4 gross revenues up 86%, revenues net of commissions nearly doubled at $1.29bn and profits up 82% to $372m, sees its share price crash by 15% in after-hours dealings, knocking $19bn off its market value.
The "problem" is that Google doesn't play the game of "steering" financial analysts to make estimates with which it is comfortable. Therefore the analysts have to make up their own. So it is the analysts who should be blamed for getting their forecasts wrong! Google's CEO Eric Schmidt said on the call last night, 'we are very pleased with the performance in every way' and he also added that these results had exceeded Google's internal forecasts.
The "problem" is also that, although these growth rates are stellar by anyone's measure, they do represent a slight reduction in the growth rates reported in the last five consecutive quarters. Higher corporate taxes, the dollar exchange rate, a $90m charitable donation, $58m stock options and higher sales and marketing costs all hit profits.
Interestingly, Google's UK operations (its biggest market outside the US) were singled out as performing particularly badly in the Christmas period. It seems that Google hasn't quite cottoned on to the fact that us British have a really long Christmas break when we tend to use our computers less. Google, of course, only gets paid when we use those click-through sites, which doesn't tend to happen when you are sleeping off the effects of Turkey overload.
Connecting Google's market value with any performance metrics has taxed us for so long that we have given up trying to figure it out. Putting share price and valuation to one side, Google is continuing to invest medium-to-long-term without too much of an eye on short-term expediency. That must be good, and should give its competitors even more cause for concern."