Google Inc (NASDAQ:GOOGL), (NASDAQ: GOOG) disclosed its advertising prices fell 7% in 1Q2015, the largest decline in a year. However, the company is not worried about the decline because it knows the source of the impact and hopes that things will stabilize with time. On the earnings front, Google failed to live up to Wall Street expectations as earnings and revenue missed amid adverse currency translation impact.
Google has pointed out that the reason for the decline comes down to growth at YouTube, were ad pricing is typically lower than other platforms. Therefore, advertising prices fell due to strong growth in YouTube numbers in 1Q.
Google is not worried about its mobile performance despite concerns elsewhere. The company is not only growing its mobile audience but pricing is also poised to strengthen over time. Google disclosed that it ended 1Q will over 1 billion users of its Android OS and some 400 million users of its Chrome browser on smartphones.
1Q financial highlight
In 1Q, Google’s revenue jumped 12% to $17.3 billion, but fell short of $17.5 billion that analysts estimated. The miss was occasioned by adverse foreign exchange rates, which cost the company about $795 million in sales. Adjusting for the currency impact, revenue jumped a healthy 17% in the quarter.
Google earned $6.57 per share on an adjusted basis in the latest quarter. That compared to $6.63 that Wall Street estimated.
Google executives termed 1Q2015 as a strong quarter, citing that the business performed well despite the widespread headwinds caused by stronger U.S. dollar.
Cost control improving
Although Google ’s actual results failed to impress at both EPS and revenue levels, investors cheered its cost control measures. Expenses at Google didn’t spike in 1Q as high as they did at Facebook Inc (NASDAQ:FB) in the same quarter. In 1Q, Google said its operating expenses rose 21% to $6.5 billion while total costs jumped 13% to 12.8 billion. That was smaller than 57% leap in operating costs at Facebook and 80% spike in overall costs.
Even though Google appears to be cooling its spending compared to rival Facebook, both companies have plans to bolster their data center capacities. Facebook unveiled plans to hire more R&D staff and invest more money in data center build-out to meet the growing demand.