Google back on track with record annual revenues

Google cheered investors with news of better than expected earnings last night, with the Californian search giant reporting signs of stability in its advertising rates.

The firm said the average that advertisers pay every time users click their ads had declined by 6 per cent in the fourth quarter of last year – a marked improvement from the 15 per cent decline recorded in the previous quarter. Rates have been easing for five consecutive quarters, as advertisers show an unwillingness to pay up to promote their business on mobile devices such as smartphones.

But the improvement was welcomed by investors, who sent Google shares higher in extended trading hours last night. Earnings per share, meanwhile, climbed to $10.65, excluding certain items, higher than the $10.5 per share figure pencilled in by analysts ahead of the announcement.

"We ended 2012 with a strong quarter," Google co-founder and chief executive, Larry Page, said. "Revenues were up 36 per cent year-on-year, and 8 per cent quarter-on-quarter. And we hit $50bn in revenues for the first time last year – not a bad achievement in just a decade and a half."

Stripping out traffic acquisition costs, or the portion of revenues Google shares with partners, net revenues stood at $9.83bn, better than expected and higher than the $8.13bn seen a year earlier.