Share prices of Google rallied after the company announced higher than expected earnings for Q3 2013.
Google announced the Q3 2013 earnings on Thursday, October 17 and reported a profit of $2.97 billion, or $8.75 per share, in comparison to a profit of $2.18 billion, or $6.53 per share.
The company confirmed that Q3 2013 revenue grew 12 percent to $14.89 billion and excluding traffic acquisitions costs (TAC) revenue was $11.92 billion up from $11.3 billion. The profit at $10.74 a share is significantly higher when compared with $8.87 per share in Q3 2012. Analysts predicted that Google will make a profit of $10.34 a share on revenue of $14.8 billion.
"Google had another strong quarter with $14.9 billion in revenue and great product progress. We are closing in on our goal of a beautiful, simple, and intuitive experience regardless of your device," said Larry Page, CEO of Google.
The company informed that paid clicks, which is the number of times users click on the sites ads and generate revenue, rose by 26 percent when compared to Q3 2013. However, Google said that cost-per-clicks (CPC), which is the prices paid for Google advertising, fell 8 percent in comparison to the same period last year. The cost-per-click has declined eight quarter in a row mainly because of the shift to mobile ads which costs less than desktop ads.
Customers using Internet are spending more time on mobile devices such as smartphones and tablets. The company suggests that clicks on Google on computers in Q3 2012 and Q3 2013 were the same. However, clicks on tablets increased 63 percent and clicks on smartphone were more than doubled.
According to a MarketWatch report, Topeka Capital analyst Victor Anthony says that Google's Q3 result was ahead of his forecasts.
"The bear case on the stock was for pressure on search volumes in the quarter, so the 26% paid clicks growth, a three point acceleration from the second quarter, was particularly robust versus expectations. But the recent changes implemented by Google should reverse that trend in the future," Anthony told MarketWatch.
Google shares rose by around 8.1 percent to $961 in after-hours on Thursday, following the Q3 results announcement.
