Google stock up 5 percent after pulverizing earnings expectations

Google accounts for the overwhelming majority of Alphabet’s revenue and profits

Google accounts for the overwhelming majority of Alphabet’s revenue and profitsEVERT ELZINGA EPA

Google's advertising business grew 24 percent.

Google has continued to give search ads more prominent space on mobile phones, helping to fuel the brisk sales growth.

Google's parent company Alphabet recorded profits of $3.2 billion in Q2 2018, it has announced, despite the $5 billion fine it received from the EU. It is appealing the ruling.

"Google reported a high-quality quarter in which the bulk of the top line outperformance vs. CS came from Websites (ongoing strength in mobile search, YouTube, as well as desktop search) followed by Network revenue (AdMob and programmatic)", the analyst Stephen Ju said. The company had been plagued by similar scandals throughout a year ago. Key ad-driven services like Google Search and YouTube grew dramatically as well.

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Revenue jumped 26pc to $32.7m, a substantial beat on the $25.6m analysts had been expecting, driven by a 24pc rise in advertising revenue and a 37pc increase in "other revenue", which includes its cloud division. That leap reflects a recent push by Google to get marketers buying across more of its advertising channels. "They're using the packaged deal, with all their properties, with a much stronger sell", said Marco Rimini, chief development officer at WPP's Mindshare media agency.

Also delighting Wall Street, Alphabet has apparently lowered the expenses in the non-Google businesses in its portfolio.

"We are analysing the decision and I think it's too early to comment or speculate beyond what we've already said, but we will always take a constructive approach", Google CEO Sundar Pichai said during the company's earnings call with analysts late on Monday. "If Google continues to go unchecked, their dominance will be extreme". It is gaining ground on Amazon, the ecommerce giant that is the world's second... Google's capital spending climbed to US$5.3 billion, up 87 per cent from the same period in 2017. The amount paid per click, meanwhile, fell 22%. "That's down from 24 percent last quarter, and aligns with Alphabet CFO Ruth Porat's advisement last quarter that the TAC as a percentage of revenue would slow beginning in Q2".

Daniel Ives of GBH Insights said in a research note that despite some regulatory concerns, "advertising and "bread and butter" search revenues were healthy and a good barometer of potential strength heading into the rest of 2018/2019". The largest Ad Revenue-based 'Net business has now averaged 23% growth for 34 (count 'em) straight quarters & shows no signs of slowing.

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