Alphabet’s second quarter income took a $4.7bn (£3.6bn) hit thanks to last week’s antitrust fine, but substantially beat consumer estimates with a 26 per cent increase on revenue year-on-year.
Google’s parent company reported revenue of $32.7bn in the second quarter of 2018, outperforming estimates of $32.1bn as collated by S&P Global Market Intelligence.
Net income fell to $3.2bn when the fine was taken into account, from what would have been $8.3bn without it. This again would have surpassed estimates, which put net income for the quarter at $6.7bn.
Due to the company being hit by a $5bn fine from EU antitrust regulators last week and a $2.7bn fine in the same period in 2017, Alphabet allowed investors to see its results side by side with numbers including fines and excluding them.
Excluding the fine, Alphabet reported adjusted earnings of $10.58 per share, trouncing estimates of $9.54 that were calculated on the same basis. When taken into account, the fine reduces this quarter’s earnings per share to $4.08.
Revenue from its advertising business, which provided 86 per cent of the group’s overall second-quarter revenue, grew roughly 24 per cent year-on-year. This was despite its cost-per-click – a metric that determines the value of its advertisements – continuing to decline.
Google’s so-called other revenue, which includes its increasingly popular cloud services, rose to $4.43bn at a 37 per cent growth rate when compared with the same period in 2017.
Traffic acquisition costs, a key expense, decreased for the first time in three years, pushing its operating margin up 24 per cent from 22.5 per cent last quarter when excluding the fine.
Alphabet’s share price was up 4.51 per cent in after-hours trading, rising as high as six per cent as investors took stock of the results.
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