The Switch, The Washington Post

Three takeaways for why Google did so well this quarter. Hint: thank YouTube.

Google’s stock soared Thursday after the technology giant reported that revenue had increased 11 percent to $17.7 billion and had seen an 17 percent jump in net income to $3.93 billion.

Its stock price, which had closed up 3.5 percent, jumped another 11 percent in after hours trading when Google’s second quarter earnings were released. The company’s new chief financial officer and Morgan Stanley transplant Ruth Porat said the company had made gains in its “core” areas: search traffic, mobile usage and YouTube viewership.

Here are the three biggest takeaways from Google’s earnings report and subsequent investor conference call:

People love YouTube

That’s not exactly a huge surprise, because who doesn’t love watching cats attack vacuum cleaners?

The time people are spending watching YouTube was up 60 percent during the quarter compared with the same period last year. More men ages 18 to 49 watch YouTube on a daily basis than network television, Google said.

The average mobile viewing session lasts 40 minutes (which means you’d have to watch that video of the cat attacking the vacuum cleaner 34 more times).

More than 1 billion people a day watch something on YouTube, company executives said on the call, and as those viewers log on, advertisers show up.

And YouTube viewers are watching more ads than ever instead of clicking “skip” as soon as humanly possible, Google says.

And you know what that means: more ad money.

“When we see the real uptick [in viewership] and the extent to which users chose to watch more ads, advertisers want to reach this audience,” said Porat.

Google is going mobile

In 10 different countries, including the United States, United Kingdom and Japan, the nations with the largest Internet audiences, mobile Google searches outnumber desktop searches, the company said.

And mobile searches are more likely geared toward immediate action. Think about it this way: If you’re out with friends and want to find a bar in the area, you’re more likely to grab your smartphone than run to your local library to find a desktop.

“Solving problems for users at scale ultimately leads to monetization opportunities,” Porat said.

And things could have been better

Porat mentioned multiple times on the investors call that the company’s earnings could have been even better if the U.S. dollar wasn’t so darn strong.

Revenue only grew 11 percent, but it could have been up 19 percent if other world currencies had fared better. Google also said it cut costs by 10 percent from this time a year ago, but saw a hiring increase of 18 percent.

Porat insisted the company would continue to invest in the life science sector and keep pouring resources into research and development even though certain projects might not be profitable yet. Remember the Android ecosystem of devices, she asked analysts on the call. That used to be experimental. Now it’s a central tenant of Google’s hardware strategy.

https://www.washingtonpost.com/blogs/the-switch/wp/2015/07/16/three-takeaways-for-why-google-did-so-well-this-quarter-hint-thank-youtube/

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