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Google smashes estimates with Q3 results

After a weak second quarter, Google has topped estimates with its better-than-expected third quarter results, revealing good revenue growth and an increase in paid advertising clicks.

The world’s leading search engine reported that its consolidated revenue increased by 12 per cent to $14.89 billion (£9.2 billion) in the third quarter, despite deepening losses at its Motorola mobile phone business – losses that according to the report have widened to $248 million (£153.1 million).

In addition, its net revenue (excluding fees paid to partners) rose to $10.8 billion (£6.67 billion), jumping up 23 per cent from $8.76 billion (£5.4 billion) in the same period last year.

The good news prompted a flurry of activity on the stock exchange, seeing shares of Google rise more than 5 per cent to $939.26 (£580.162) in after-hour trading on Thursday. It seems that the strong set of results have reassured investors that Google is managing to find new ways to make money from mobile users, a vital move when many customers are shifting away from desktops.

“Google had another strong quarter,” announced Google’s CEO, Larry Page. “We are closing in on our goal of a beautiful, simple and intuitive experience regardless of your device.”

The Internet giant has mined impressive profits from its search ad business for over a decade, and its financial report states that paid clicks increased 26 per cent year-on-year during the three months ending 30 September. However, the average cost-per-click decreased by eight per cent.

This marks the eighth quarter in a row that the price advertisers pay each time someone clicks on an ad has decreased. The fall is partly due to the fact that mobile ads cost less than their desktop counterparts, but it also highlights a wider concern that despite Google’s optimism, the consumer shift towards mobile devices threatens the search engine’s core business of selling advertisements.

Still, according to Emarketer, Google is on track to take a third of all online advertising revenues this year. By comparison, Facebook has a 5 per cent share – meaning that Google is well ahead of its rivals.