Google parent’s 2Q sales meet forecasts
Alphabet Inc. reported second-quarter revenue on Monday that met analysts’ projections, falling short of the most-optimistic estimates, and said the cost of its Google ads declined.
The company’s profit was also hammered by a record antitrust fine from the European Union.
Sales, minus partner payouts, were $20.92 billion, in line with analysts’ consensus forecasts, but below some more bullish expectations. Estimates ranged from $20.55 billion to $21.61 billion, according to data compiled by Bloomberg.
Google also reported a 23 percent decline in the average price of its ads, compared to a year earlier. That was bigger than the first quarter’s 19 percent year-over-year drop.
Alphabet shares fell almost 3 percent in after-hours trading. The stock closed up 0.5 percent at $998.31 in New York trading earlier on Monday.
The total number of Google ads users clicked rose quickly, skewed heavily toward Google’s own properties, such as Search and YouTube.
“The biggest contributor to growth was mobile search and it’s clearly an area where we continue to grow from our underlying engineering strength,” Chief Financial Officer Ruth Porat said during a conference call with reporters.
Regulators in Europe levied a $2.7 billion penalty in June, saying Google skewed its general search results to thwart smaller shopping search services. The Mountain View, Calif.-based company disagreed and is considering an appeal. Two more antitrust investigations against Google sit on the EU docket, a concern for some analysts.
The company accounted for the fine as a one-time dent on profit during the quarter, bringing net income to $5.01 per share. Analysts were expecting $4.45 per share, including the EU fine, according to figures compiled by Bloomberg.
Spending on Alphabet’s “Other Bets” — subsidiaries including its venture capital and self-driving car divisions — fell sharply during the quarter. Porat attributed this to an ongoing retreat in the expansion of its Google Fiber fast Internet service.