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Google Undershoots Expectations With $18.1 Billion Revenue But Still Shows 19% Annual Revenue Growth

January 29, 2015 - Written By David Steele

Google released their Q4 2014 results today, reporting revenue of $18.1 billion and earnings per share of $6.88. Net income was $4.76 billion, up from £3.38 billion for Q4 2013. Full year revenue was a cool $66 billion, up 19% compared with 2013 and included the gain of $740 million, net of tax, following the sale of Motorola Mobile to Lenovo, which was concluded in the year. In the breakdown of the revenue generated by Google, Google’s sites businesses generated almost 70% of the business, showing strong growth of 18% compared with 2013. The Networks generated around 20% and growth of 6% leaving the “other” category showing growth of 19% year on year.

One interesting point looking through the results statement is that a foreign exchange headwind – that is, the value of the dollar become less compared with various international currencies that Google conducts business in around the world – effectively cost Google half a billion dollars. This is significant because more than half of Google’s revenue was generated outside of the United States – with the company citing that revenues generated from the United Kingdom totaled $1.66 billion, around 9% of their fourth quarter total. Google employed close to 54,000 people around the world at the end of 2014.

How did these numbers compare with the expectations? Well, Wall Street was expecting the quarterly revenue to be $18.5 billion, so Google fell short of this number here. The critical earnings per share – which shows how hard the business assets are working per stock in circulation – was expected to be $7.13 and here, Google didn’t quite break the $7 per share barrier. However, Google has a habit of consistently under-performing analyst expectations. Missing expectations is not always such terrible news (after all, these expectations are estimates), but it depends on why. For the analysis, we’ll have to wait for Google’s conference call.

Google’s stock is trading at close to a 52-week low and following the results, the share price had fallen in out-of-hours trading. Does this mean that the shares now represent better value? Perhaps! But we’ll need to see what the statement and investor presentation says. Meanwhile, over to our readers: do you own shares in Google? Are you reliant on Google for your retirement? Do the business results interest you? Let us know in the comments below.