Published: Tue, July 24, 2018
Finance | By Cynthia Curry

Alphabet revenues hit $32.7 billion on strong ad sales

Alphabet revenues hit $32.7 billion on strong ad sales

Alphabet Inc on Monday reported that expenses from its Google search business grew more slowly in the second quarter while revenue rose more steeply than analysts had anticipated, boosting profit above Wall Street targets and pushing shares up 3.6 percent after hours.

Alphabet clocked revenue of $32.7 billion, which was a year-on-year (YoY) rise of 26 percent.

The penalty from the European Commission topped a previous record fine of $2.7 billion the company was dealt in 2017 after EU regulators said Google violated antitrust rules for online shopping practices.

The company's CEO Sundar Pichai said it was too early to understand the impact of the fines on Android's operations. Even including the record fine, the company generated $3.2 billion in net income during the second quarter. The company is selling more ads as its YouTube video service and Google search grow globally, he said.

The monster quarter came despite a regulatory backlash in Europe, rising questions about Google's massive data collection and clashes with advertisers over inappropriate content on YouTube.

Google also has tweaked its comparison shopping service as it strives to comply with an European Union ruling from previous year, and it plans to soon release changes to how it handles political ads. The shares rose as much as 5.3 per cent, the most in nearly nine months, to US$1,275 at the market open in New York Tuesday.

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Alphabet said its total revenue rose 26% to $32.7 billion in the second quarter.

On the company's conference call, CFO Ruth Porat said, "One of the biggest opportunities for investment continues to be our ads business, where we're continuing to invest meaningfully". Google is appealing the ruling.

"I think overall it [Android] has created more choice for everyone, not less", Pichai said during the call, when asked about the European Union decision. The average estimate of 13 analysts surveyed by Zacks Investment Research was for earnings of $9.45 per share.

Google brings in the vast majority of Alphabet revenues, actually its "Othe Bets" are loss making right now. Google's Other revenues -which now includes the smart thermostat business Nest - were $4.23 billion.

Built on the strength of its advertising empire, Google saw surprisingly strong growth.

Its Other Bets segment, which includes companies like the driverless vehicle firm Waymo, reported a quarterly operating loss of $732m, up from $633m past year.

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