Google Inc. on Thursday reported revenues of $6.77 billion for the quarter ended March 31, up 23 percent compared with the first quarter of 2009.
Google reports its revenues, consistent with generally accepted accounting practices (GAAP), on a gross basis without deducting traffic acquisition costs (TAC). In the first quarter of 2010, TAC totaled $1.71 billion, or 26 percent of advertising revenues.
“Google performed very well in the first quarter, with 23 percent year-over-year revenue growth driven by 
strength across all major verticals and geographies,” Patrick Pichette, Google’s chief financial officer, said in a statement. “Going forward, we remain committed to heavy investment in innovation — both to spur future growth in our core and emerging businesses as well as to help build the future of the open web.”
Google’s GAAP operating income in the first quarter of 2010 was $2.49 billion, or 37 percent of revenues. This compares to GAAP operating income of $1.88 billion, or 34 percent of revenues, in the first quarter of 2009.
GAAP net income in the first quarter of 2010 was $1.96 billion, compared with $1.42 billion in the first quarter of 2009. Non-GAAP net income in the first quarter of 2010 was $2.18 billion, compared with $1.64 billion in the first quarter of 2009.
Google-owned sites generated revenues of $4.44 billion, or 66 percent of total revenues, in the first quarter of 2010. This represents a 20 percent increase from Q1 2009 revenues of $3.69 billion.
Google’s partner sites generated revenues, through AdSense programs, of $2.04 billion, or 30 percent of total revenues, in the first quarter of 2010. That’s up 24 percent from Q1 2009 network revenues of $1.64 billion.
Revenues from outside the United States totaled $3.58 billion, or 53 percent of total revenues, in Q1 2010, compared with 53 percent in Q4 2009 and 52 percent in the Q1 2009.
Aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of its AdSense partners, increased approximately 15 percent over the first quarter of 2009 and approximately 5 percent over the fourth quarter of 2009.
Average cost-per-click, which includes clicks related to ads served on Google sites and the sites of its AdSense partners, increased approximately 7 percent over the first quarter of 2009 and decreased approximately 4 percent over the fourth quarter of 2009.
Traffic Acquisition Costs, the portion of revenues shared with Google’s partners, increased to $1.71 billion in the first quarter of 2010, compared to TAC of $1.44 billion in the comparable quarter of 2009. TAC as a percentage of advertising revenues was 26 percent in the first quarter of 2010, vs. 27 percent in the first quarter of 2009.
The majority of TAC is related to amounts paid to AdSense partners, which totaled $1.45 billion in the first quarter of 2010. TAC also includes amounts paid to certain distribution partners and others who direct traffic to Google, which totaled $265 million in the first quarter of 2010.
Other cost of revenues, comprised primarily of data center operational expenses, amortization of intangible assets, content acquisition costs and credit card processing charges, increased to $741 million, or 11 percent % of revenues, in the first quarter of 2010, compared with $666 million, or 12 percent of revenues, in the first quarter of 2009.
Operating expenses, other than cost of revenues, were $1.84 billion in the first quarter of 2010, or 27 percent of revenues, compared to $1.52 billion in the first quarter of 2009, or 28 percent of revenues.
In the first quarter of 2010, the total charge related to stock-based compensation was $291 million, compared with $277 million in the first quarter of 2009.
GAAP operating income in the first quarter of 2010 was $2.49 billion, or 37 percent of revenues. This compares to GAAP operating income of $1.88 billion, or 34 percent of revenues, in the first quarter of 2009.
GAAP net income in the first quarter of 2010 was $1.96 billion, compared with $1.42 billion in the first quarter of 2009.
Net cash flow provided by operating activities in the first quarter of 2010 totaled $2.58 billion, compared with $2.25 billion in the first quarter of 2009. In the first quarter of 2010, capital expenditures were $239 million, the majority related to IT infrastructure investments. Free cash flow, defined as net cash provided by operating activities less capital expenditures, was $2.35 billion in Q1 2010.
The company said it expects to continue to make significant capital expenditures.
On a worldwide basis, Google employed 20,621 full-time employees as of March 31, 2010, up from 19,835 full-time employees as of Dec. 31, 2009.
