Tuesday, July 22, 2014

Google Earnings Review & My Two Cents

Google had quite the incredible quarter!
Earnings were reported this past Thursday, July 17th.

Before I dive in to earnings, just want to share that my very first shares of stock ever were from Google (back in June of 2008). I am pretty sure I’ve told this story a million times on the blog but is currently one of my favorite companies to own and thus, why I am so excited to share news of another amazing quarter.

*I don’t own many shares of the company and I am not sure I would buy new shares at today’s prices (currently trading at ~$594 a share). However, I am happy to be a shareholder (even with my very minor contribution) and definitely see this company thriving for years to come.

So anyways, here’s a basic overview of the earnings:

·         Consolidated revenue of $15.96B (yes, billion) for the quarter ended June 20, 2014. This represents an increase in revenue of 22% in comparison to the same quarter last year. It comes to no surprise that bulk of that (65% of total revenue) was generated directly from their site (revenue generated from direct advertising on their site). Google makes money in a few different ways but advertisement remains its main source of revenue!

·         Net income for the second quarter came in at $3.42 billion, which is a slight increase from the $3.23 billion generated during second quarter 2013!

·         Reported cash flow from operations (a “fancy” term for money generated by a company’s normal business operations, or cash generated from doing business) came at $5.63 billion for the second quarter 2014, compared to $4.71 billion in the second quarter 2013.

·         Capital expenditures were reported to be $2.65B, the majority of these expenses had to do with the new construction of a data-center, real estate purchases and production equipment.

·         Free Cash Flows-- Company generated $2.98 billion free cash flow for the quarter. For the entire year (12 months ending 06/30/14) Google has a total of ~$3.4 billion. For the entire history of the company, including all the money that has accumulated (+ short term investments), the amount is now at $55.5 billion, as of quarter ending June 30th, 2014. 

*For my beginner investors--- free cash flow is basically all the cash a company is able to generate (or is left over with) after paying all expenses including investments made to maintain or expand operations.  I don’t know about you but if I had 55+ billion worth of cash and short term investments (those that last less than a year) in my bank account I would be pretty happy (that’s actually quite an understatement).

·         Long term debt for Google as of June 30th, 2014 is 3.2 billion (*considering the incredible amount of cash Google generates, you’ll probably notice this is not very significant).

I could probably go on and on but I will stop right here. If you would like to take a closer look at the earnings yourself (and would like something to read on the train while on your way to work or during leisure times) feel free to check out the complete earnings release: Here

My Two Cents
Google is Google. Is a leader. Is a verb. Nothing comes close. I can easily see this company growing an excelling as the years go on. Beside advertisement, they are working hard to develop other sources of revenue—from acquisitions to innovative projects like “Google glass” or self-driven cars, I feel Google’s potential is quite exponential and I look forward to seeing how they continue to remain innovative and a leader for years to come.

*If you have any questions in terms of where to find certain numbers in the financial statements or anything in general you aren’t clear about, feel free to email me! Also, feel free to say hello. Always love hearing from my readers.

Happy Investing and cheers to profits!