Google Conference Call Highlights

Google Inc GOOG reported its third quarter earnings. Shares of the company are down 3 percent.

Below are some key highlights from its conference call.

• Our gross total consolidated revenue grew a healthy 20% year-over-year to $16.5 billion and was up 4% quarter-over-quarter.
• Without currency fluctuations, our gross total consolidated revenue growth would have been 19% year-over-year.
• Google sites revenue was also up 20% year-over-year to $11.3 billion, and was up 3% quarter-over-quarter driven by the strength in our Mobile Search.
• Network revenue was up 9% year-over-year at $3.4 billion and was flat quarter-over-quarter, driven by improved year-over-year growth in the AdMob and the AdExchange businesses.
• Finally, Google's other revenue grew a healthy 50% year-over-year to $1.8 billion and was up 15% quarter-over-quarter.
• Growth driven by year-over-year growth mainly from the Play Store, but also complemented by an increase in licensing revenue.
• Our global aggregate paid click growth was strong this quarter, up 17% year-over-year and up 2% quarter-over-quarter.
• Aggregate CPCs were down only 2% year-over-year and flat quarter-over-quarter.
• And without currency fluctuations, aggregate cost-per-click would've been down 1%, and in fact up 1% quarter-over-quarter.
• So to that end, Google Sites paid clicks were up 24% year-over-year and up 4% quarter-over-quarter.
• Google Sites CPC were down 4% year-over-year and down 1% quarter-over-quarter.
• Our Network paid clicks were up 2% year-over-year and down 4% quarter-over-quarter.
• Our aggregate monetization metrics continue to be impacted by a number of factors including geographic mix, device mix, property mix, as well as ongoing product and policy changes.
• Turning to geographic performance now, we saw solid performance in the U.S. as well as in the rest of the world.
• U.S. revenue was up 15% year-over-year to $7 billion.
• The U.K. was up 17% year-over-year to $1.6 billion.
• In the U.K., growth was impacted by a combination of factors this quarter, including platform and property mix as well as tough comps.
• Our non-U.S. revenue excluding the U.K. was up 26% year-over-year to $7.9 billion.
• This accounted for 48% of total revenue, which includes a $10 million benefit from our hedging program.
• In fixed FX term in fact, the rest of the world also grew 26% year-over-year.

Expenses:

• Traffic acquisition costs were $3.3 billion or 23% of total advertising revenue.
• Our non-GAAP other cost of revenue was $2.8 billion in Q3, which excludes stock-based compensation [SBC] and also
• Headcount was up roughly 3,000 in Q3. In total, we ended the quarter with approximately 55,000 full-time employees, and please note that the head count does include still approximately 3,500 full-time employees from the Motorola business.
• We continue to be happy with our strong operating cash flow at $6 billion.
• CapEx for the quarter was $2.4 billion, and this quarter the majority of the CapEx was related to our data center construction, production equipment, and real estate purchases, in that order.
• In total, our free cash flow was then $3.6 billion.
• We have long had local inventory ads that enable merchants to show customers this information in the U.S., and we launched these in the U.K., France, Germany, Japan, and Australia last quarter.
• In summary, the core of our business, performance advertising, continues to deliver great results.
• We're just getting started with YouTube and its potential.
• We've sold out the majority of our U.S. Google Preferred offering, which represents among the top 5% of popular channels inventory on YouTube.
• Today, Play Movies is available in 93 countries, and Play Books is available in 61 countries.
• On the hardware front, just yesterday, we unveiled three fantastic new Nexus devices: Nexus 6 phone, Nexus 9 tablet, and Nexus Player, an Android-powered streaming media player.