Alphabet stock jumps on strong earnings report
Google’s parent tops estimates, rises 4% in extended trading
Robust advertising growth propelled Alphabet to a street-beating quarter as the Google parent company showed it’s grabbing the attention and budgets of users and advertisers alike as they shift to mobile devices from desktop computers.
Shares gained more than 4% in extended trading after topping Wall Street estimates. Alphabet reported second-quarter earnings of $8.42 a share on revenue of $21.5 billion. Wall Street expected earnings of $8.04 a share on $20.76 billion in revenue. Before Thursday’s results, Alphabet had missed Wall Street consensus estimates in eight of the past 12 quarters. The earnings landed one day after Google rival Facebook reported a blow-out quarter.
What’s clicking for Google? Mobile, BGC Financial analyst Colin Gillis says. Advertisers pay less for each click on mobile ads than they do on desktop computers but the growing number of clicks on mobile ads is beginning to make up for that.
Cost per click was down 7% compared with the 6% analysts expected. Paid clicks were up 29% year over year compared with the 27% analysts expected.
“Marketers are flooding into mobile because they are seeing a more effective return. The clicks are cheaper and they are starting to work,” Gillis said. “You are seeing the declines in cost per clicks abating. And we are going to get to a spot where both levers, paid clicks and cost per clicks turn positive again. And that’s the road to a trillion-dollar company.”
Google’s “other revenues,” businesses such as enterprise cloud, Play Store, and hardware sales, were $2.17 billion, up 33%.
Alphabet’s “other bets,” businesses outside of Google, brought in $185 million in sales in the second quarter but losses widened to $859 million. A year ago, other bets such as home automation maker Nest and speedy Internet provider Google Fiber reported $75 million in revenue and operating losses of $574 million.
“We continue to invest responsibly in support of our many compelling opportunities,” Alphabet’s finance chief Ruth Porat said in a written statement.