Google reported revenues grew 24pc in the first quarter to hit US$10.6bn, yielding the internet giant a profit of US$2.89bn. Google took the occasion of the bumper results to reveal a new stock dividend structure aimed at preserving the corporate structure that enabled Google to focus on the long term.
“Google had another great quarter with revenues up 24pc year on year,” said Larry Page, CEO of Google.
“We also saw tremendous momentum from the big bets we’ve made in products like Android, Chrome and YouTube. We are still at the very early stages of what technology can do to improve people’s lives and we have enormous opportunities ahead. It is a very exciting time to be at Google.”
The internet giant reported an operating income of US$3.3bn, or 32pc of revenues. Earnings per share in the first quarter was US$8.75, up from US$5.51 last year.
Google-owned site revenues were up 24pc to US$7.31bn. Its partner sites generated revenues of US$2.9bn, up 20pc on last year.
Revenues from outside the US totalled US$5.77bn. Revenues from the UK totalled US$1.1bn.
Traffic acquisition costs, or revenue shared with partner companies, was US$2.5bn during the quarter. The majority of this revenue – US$2.04bn – went to network members.
A new class of stock
In a letter to investors explaining the stock split, Google’s management team said it was creating a new class of non-voting stock that will be listed on the NASDAQ.
The new shares will be distributed via a stock dividend to existing stockholders, each share owner will receive one new share of the non-voting stock.
Google said the two-for-one stock split is designed to compensate without diluting the company’s governance structure.
“We have protected Google from outside pressures and the temptation to sacrifice future opportunities to meet short-term demands. Long-term product investments, like Chrome and YouTube, which now enjoy phenomenal usage, were made with a significant degree of independence.
“We have a structure that prevents outside parties from taking over or unduly influencing our management decisions. However, day-to-day dilution from routine equity-based employee compensation and other possible dilution, such as stock-based acquisitions, will likely undermine this dual-class structure and our aspirations for Google over the very long term. We have put our hearts into Google and hope to do so for many more years to come. So we want to ensure that our corporate structure can sustain these efforts and our desire to improve the world,” Google said.