Alphabet Gains as Google Ad Machine Powers Past Record Fine

Alphabet Gains as Google Ad Machine Powers Past Record Fine

Google is still raking in marketing dollars from advertisers, propelling the online search giant to another strong quarter in the face of costly regulatory trouble in Europe, according to Bloomberg. The shares jumped as much as 6.1 percent in extended trading, putting them on course for a record.

Parent company Alphabet reported second-quarter sales, minus partner payouts, of $26.24 billion during the second quarter. Analysts were expecting revenue of $25.55 billion. Google’s advertising business grew 24 percent. Chief Financial Officer Ruth Porat said most of that came from mobile and automated ads.

Alphabet reported two different profit figures to account for a $5 billion fine the European Union imposed last week for violating competition law with Google’s Android mobile software. Excluding that, Alphabet said profit was $11.75 a share. Google plans to contest the ruling. Even including the record fine, the company generated $3.2 billion in net income during the second quarter.

Google properties revenue jumped 26 percent to $23.3 billion. While second-quarter sales jumped, so did costs for the technology giant. Google’s capital spending climbed to $5.3 billion, up 87 percent from the same period in 2017. The sums Google pays out to websites and mobile partners to distribute its search engine and ads, called Traffic Acquisition Costs, also rose to $6.4 billion for the quarter. Still, that was 23 percent of ad revenue, down from 24 percent in the first quarter of 2018.

The company’s other revenue bucket, which includes cloud, hardware and app sales, grew 37 percent to $4.4 billion in the second quarter. Other Bets, the home of Google’s riskier, experimental businesses, lost $732 million in the quarter, versus a loss of $633 million in the same period a year earlier.