The Google annual report is here. I've always found annual reports to be some of the most honest publications a company ever puts out.
So far, this year's version is not chock-full of excitement. But do you wonder if CFO George Reyes had not mused this boilerplate out loud before the analyst meeting would this buried section in the annual report have had the same impact? Or maybe you don't wonder that...
We expect that our revenue growth rate will decline over time and anticipate that there will be downward pressure on our operating margin. We believe our revenue growth rate will generally decline as a result of increasing competition and the inevitable decline in growth rates as our revenues increase to higher levels.
Never mind the fact that their margin is actually increasing. It is hard to keep up 100+% growth rates, though.
The minor highlights include:
- US is 62% of Google's revenue, but less than 50% of the traffic.
- Google site traffic is growing faster than non-Google site traffic. Which is good from a margin perspective. Very good.
I.e. Traffic acquisition costs as a percentage of advertising revenues are decreasing for Google. Some might say that Google is tweaking their traffic mix. To which I say: Then how come Google is grabbing more and more total traffic every day - on both Google and non-Google sites?
It's a simple land grab: they are getting traffic any way they can. And they are going after a growing pool and winning the most share. That's good execution on their part.
If the stock wasn't so hot, that fact would be pretty interesting to all the nay-sayers.
This is kinda fun as well: Five of our Google Network members account for approximately 88% of the total future guaranteed minimum revenue share payments and 10 of our Google Network members account for 95% of these payments.
88% percent of something like $200M in the last year goes to 4 partners. That's getting more concentrated (up from 70% from 5 partners in 2004). Obviously, Google has stopped doing much guaranteed rev stuff, as that payout number is in decline as well.
That means there are 4 big partners with rev-share guarantees. You know AOL is the biggest making up 9% of Google's total revenues, but who are the others? Earthlink? Amazon? AT&T Worldnet? I'm not sure - and Google's pretty quiet about it.
¶ 3/17/2006
