a IS FOR ALPHABET INC.

AND ITS LARGER-THAN-EXPECTED INCREASE IN REVENUE

b IS FOR BILLIONS

US$4.9 BILLION IN Q2 NET INCOME

c IS FOR CLICKS

AD REVENUE ROSE 19.5%, WITH A 29% INCREASE IN PAID CLICKS

Alphabet Inc., Google Inc.’s parent, posted a 21.3 per cent increase in second- quarter revenue, exceeding analysts’ expectations, as the tech giant continued to nudge its vast advertising business toward mobile and capitalized on the boom in video.

The sharp revenue growth suggests that Google is successfully navigating the high- stakes transition from desktop to mobile advertising, said Colin Gillis, an analyst with BGC Partners. Advertisers typically pay less for user clicks on mobile ads than on desktop ads, Google’s traditional strength, but the strong earnings performance suggests that is beginning to change, he said.

“They’re doing an excellent job of pulling the mobile landscape through to being more efficient,” Gillis said.

The company’s shares rose 6.5 per cent to US$ 816 in after- hours trading on Thursday.

Strong gains in the redhot video market also drove the company’s growth in the quarter, Google chief executive Sundar Pichai said during a call with investors.

Alphabet’s consolidated revenue rose to US$ 21.5 billion in the three months ended June 30, from US$ 17.73 billion a year earlier. Analysts on an average were expecting revenue of US$ 20.76 billion, according to Thomson Reuters.

Google’s ad revenue increased 19.5 per cent to US$ 19.14 billion, while it notched a 29 per cent rise in paid clicks, where advertisers pay the company only if a user clicks on the ad.

Alphabet, which dominates the mobile ad market along with rival Facebook Inc., has been trying to beef up ad revenue from mobile and video businesses, both of which until last year were a little less profitable than its desktop business.

Despite the strong revenue growth, the falling costper- click on advertisements is cause for concern, said analyst Patrick Moorhead of Moor Insights & Strategy.

“Advertisers aren’t willing to pay as much for Google advertising,” he said.

Revenue at Alphabet’s Other Bets business rose 150 per cent to US$ 185 million, while operating losses widened to US$859 million.

The division i ncludes broadband business Google Fiber, home automation products Nest, self- driving cars and X — the research facility that works on “moon shot” ventures.

Alphabet chief financial officer Ruth Porat, widely credited with bringing a culture of greater financial discipline to the company, suggested that she will continue to scrutinize the Other Bets business.

Net in c o me rose to US$ 4.88 billion, or US$ 7 per Class A and B common stock, from US$ 3.93 billion, or US$4.93 per share.

Excluding items, the company earned US$ 8.42 per share, beating analysts average estimate of US$8.04, according to Thomson Reuters.