Google Revenues
Published May 27th, 2007
International revenues were $1.71B or 47% of the total. So, US revenues can be estimated at 53% or $1.95 Billion.
AdSense serves ads to other web sites. When a user clicks on an ad the advertiser pays Google a CPC fee and Google splits the revenue with the site owner. Google’s partner sites generated revenues, through AdSense programs, of $1.35 billion, or 37% of total revenues.
US Search related revenue - We know that US revenue was 53% of the total, or $1.95 Billion, and we know that AdSense accounted for 37% of total revenues, leaving 63% related to search. So, search accounted for 63% of the $1.95 Billion US revenues or $1.23 Billion.
Revenue of $0.12 per search query - Now we can compare total US search revenue of $1.23B to total the 10.1 billion US searches, which yields $0.12 for every search performed. You could argue that all of Google’s revenues derive from search. If they didn’t have search they wouldn’t have ANY of the other revenues. Taking that approach and comparing US revenues of $1.95B and dividing by total US searches yields $0.19 in revenue per search.
Each 1% of search market share is worth over $100M in revenues - Here is the math. There were 7.3 billion searches performed in March of 2007. One percent of that is 73 million searches times $0.12 revenue per search or $8.76M per month. That translates to $105.1M in annualized revenue.
The stock market values 1% market share at over $1 Billion - Google (NASDAQ: GOOG) stock sells for more than 10 times revenues. There have been several acquisitions over the past few months that have also been valued at in excess of 10 times revenues. Using this multiple, that 1% of market share that generates $105M in revenues is worth over $1 Billion in market cap. Google gets a higher market multiple, so their 1% of market share is worth $3 Billion.
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