In today's world, most companies span several regions and sell across the world. As Foolish colleague Morgan Housel notes, 10 years ago, less than a third of S&P 500 revenue came from outside the United States. Today, more than half of the S&P 500's growth comes from overseas. And that number is growing.
The truth is, investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from foreign markets.
With that in mind, today we're looking at Google
Where Google's sales are today
Today, Google collects 48% of its sales from its home United States market.
Source: Capital IQ, a division of Standard & Poor's.
Where Google's sales were five years ago
Five years ago, Google collected 61% of its sales from the U.S. market. The company has pushed hard into foreign markets but has had less success in emerging markets such as China, where Baidu
Source: Capital IQ, a division of Standard & Poor's.
Competitor checkup
One last point to check is how Google's footprint compares with some of its peers across the broader search industry.
Company |
Geography With Most Sales |
Percent of Sales |
---|---|---|
United States | 48.0% | |
Baidu | China | 99.8% |
Microsoft |
United States | 58.0% |
Yandex | Russia | 97.7% |
Source: Capital IQ, a division of Standard & Poor's.
Google is the most geographically diversified of its peers. Yandex and Baidu are both working on expanding past their founding markets, but those efforts still constitute a slim amount of their total sales.
Google's sales by geography are relatively easy to understand, but Microsoft's are a bit more complex in comparison. The company keeps contracts with large multinational customers that might book sales within the United States, even though end revenue is really abroad. The important point to remember is that Microsoft's sales come mostly from packaged software, which is easily pirated. That keeps the company from sharing in computer usage gains in emerging markets. Google, on the other hand, makes money from having users connect to the Web, so its path to profits in emerging markets is much easier.
Even with a few roadblocks in countries like China and Russia, Google looks to have asserted its search dominance in most countries of the world. As Internet usage continues accelerating in emerging markets, that should bring a powerful new stream of revenues online for the search behemoth.
Keep searching
If you're looking to stay updated on Google or any other companies mentioned here, make sure to add them to our free watchlist service, My Watchlist. It's free, and it helps you constantly stay updated with the news and analysis on your favorite companies.
- Add Google to My Watchlist.
- Add Baidu to My Watchlist.
- Add Microsoft to My Watchlist.
- Add Yandex to My Watchlist.