Google, YouTube owner beats analysts’ estimates

SAN FRANCISCO Alphabet Inc. surpassed expectations for quarterly revenue and earnings on Monday, reporting higher advertising sales across its platforms and trying to move past a record US$2.7-billion European Union fine by taking the entire charge at once.

On a consolidated basis, revenue for the owner of the Google search engine and the YouTube video service rose about 21 per cent to US$26.01 billion in the second quarter ended on June 30, beating the analysts’ average estimate of US$25.65 billion, according to Thomson Reuters I/B/E/S.

Earnings per share was US$5.01, beating an average estimate of $4.49, and would have been US$8.90 if not for the EU antitrust fine announced last month, Alphabet said. Earnings per share was US$7 in the second quarter of 2016.

But the firm’s shares, which closed up in regular trading on Monday, fell about three per cent to US$968 after the bell. Shares of Alphabet had gained nearly 26 per cent this year through Monday’s close.

“You’re seeing some profit-taking after a pretty good run,” FBN Securities analyst Shebly Seyrafi said in an interview.

One potential blemish was aggregate cost-per-click, which fell 23 per cent year-over-year, but the impact on Google’s ad business was not immediately clear.

EU antitrust enforcers last month hit Google with a record 2.4-billion-euro (US$3.5 billion) fine for favouring its own shopping service. Alphabet said shortly after the EU announcement that it would report the whole fine as an expense in the second quarter.

Revenue was boosted by robust demand for advertising on mobile and on YouTube.