Even in the rough economy, Google beats the street

Google announced its financial results for the fourth quarter of 2008 today, and it’s good news: The company once again beat Wall Street’s estimates. Net revenues stood at $4.22 billion, or $5.10 per share. Wall Street had been looking for something more like $4.12 billion in net revenue, or $4.96 a share.

Google’s overall revenue of $5.70 billion represents an increase of 18 percent from the year ago period, and an increase of 3 percent over last quarter. In terms of U.S. versus International revenue, things are equal now with both sides contributing 50 percent.

Google notes that it is continuing to hire, but it only added about 100 employees in the past quarter. As one might expect, the company did not address the recent layoffs.

One of the biggest items announced today was that Google would allow employees with underwater options to exchange them. You can read more about that here.

Here’s Google chief executive Eric Schmidt’s canned statement from the release:

“Google performed well in the fourth quarter, despite an increasingly difficult economic environment. Search query growth was strong, revenues were up in most verticals, and we successfully contained costs. It’s unclear how long the global downturn will last, but our focus remains on the long term, and we’ll continue to invest in Google’s core search and ads business as well as in strategic growth areas such as display, mobile, and enterprise.”

Google’s stock price is up, though not too substantially in after-hours trading right now. Currently, it’s up about $5 a share, or 1.6 percent.

Notes from the call with Schmidt and other Google executives:

• In the short term, on-going prudent management of the business
• Google-owned sites generated 67 percent of total revenue
• Aggregate paid clicks rose 18 percent from a year ago
• 85% of employees have at least some stock options that are underwater
• Employees who choose this option must give up 12 months of vesting
• 800 free apps are now available in the Android Marketplace
• “The cloud is now mainstream.”
• “Business is quite healthy.”
• Google’s free cash flow is now just about $1.8 billion
• There are 20,000 full times employees at the end of Q4
• 350 search quality improvements launched in 2008
• Mobile search traffic went up and peaked in December
• “More phones in the works” re: Android
• More than a million businesses on Google Apps

Highlights from the Q&A session (paraphrased):

• Question about video — Three new video ad formats, but we haven’t found a single solutions that drives revenues. For getting videos to other devices, there are plenty of new partners to put YouTube in the living room and around the home away from just the computer. Google TV ads are expanding.
• Revenue per click? — In a relative sense, AdSense for search was a bit weaker, as usual Google says some of this is due to quality improvements in ads served.
• Distribution deals — Chrome will come into play more and more going forward. Google basically dodged the question about losing out on the search deal with Verizon to Microsoft.

We’re contuing to update this post with the numbers as well as points of interest from Google’s earnings call.

[photo: flickr/heartbeaz]