Google’s Earnings Report – Good Tidings for Google Network, Vertro
After yesterday’s close, Google reported earnings for the fourth quarter of 2009. Vertro will apparently have the wind at its back as the numbers suggest that the market for online advertising continues to improve. Google reported a revenue increase of 17%.to $6.7 billion with 31 percent of that coming from the Adsense network. More importantly, Google reported that while its own sites experienced very strong growth of 16%, the Adsense network grew at even more impressive 21% clip. Even more bullish for investors in Vertro and other Google Adsense network companies, Google reported a 2% sequential growth in the average cost per click across all of its properties, which is particularly strong when you consider the strong CPC growth they had reported in Q3 and also that the higher growth rate (21%) for the Adsense network suggests that those site’s sequential CPC growth may have been even higher.
As most Vertro investors are aware, the vast majority of that Adsense revenue comes from the larger Google Network players including AOL, IACI’s Ask.com, Infospace and several others including Vertro. Of course, most of the other companies in the $25 million club (those who consistently generate over $25 million in Google Adsense revenue per year) are household names or at least own one or more well known consumer facing web properties. Vertro investors are set to enjoy not only the rebound in online advertiser’s budgets that are apparently driving CPC growth across the network, but also the recognition that will ultimately come for Vertro as a company that is a player in this space with a model that is working to drive growth that exceeds the revenue growth experienced by the larger players. Such recognition is usually accompanied by a marked increase in the multiple of earnings/revenues that investors are willing to pay for the company’s shares.
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