Despite EU fine, Alphabet beats Q2 revenue and profit expectations

Wednesday, 26 Jul, 2017

Google parent Alphabet (NASDAQA:GOOGL) will unveil second quarter numbers after the bell and fallout from its recent $2.7bn record fine from European regulators is likely to be a focus.

The California-based company's shares, which closed marginally up in regular trading on Monday, fell almost 3 per cent to $969 after the bell.

At Other Bets, the collection of startups that make up Alphabet outside of Google, losses narrowed to $772 million from $855 million a year earlier. Sales are expected to come in around $25.6 billion, up 19% year-on-year, and up 3.9% from $20.1 billion last quarter - which beat expectations of $19.75 billion.

Porat also said that its cloud segment accounted for "the most sizable headcount additions" from Alphabet's 1,614 new hires in the latest period. Most of the ad revenue was generated by YouTube and mobile search, while it was reported that the popular video streaming website now sports 1.5 billion monthly users.

Google's "other" business - everything that's not advertising, including its cloud business and Google Play app store - grew 42 percent year over year to $3.1 billion.

Traffic acquisition costs to Google Network Members amounted to $3 billion, and it consisted of 72% of Google Network Members' Properties revenues.

Alphabet's advertising business continues to grow at a mammoth pace despite a very hefty setback from the European Union in the form of a massive fine - but all the signs might not be pointing to a ideal future for Google. The company had revenue of $24.75 billion during the quarter, compared to the consensus estimate of $24.18 billion. Paid clicks were up 61% over previous year.

The US company's operating income (or operating profit) for the second quarter of 2016 was almost $6bn, while over the same period this year it made just over $4bn. The operating income too saw a surge of 15% in the quarter, after taking the fine into consideration.

After the Alphabet Q2 FY17 earnings release, the company's stock slumped by as much as 2.7%, falling to $971.33 in after-hours trades. Google was fined by around $2.74 billion last month due to the company reportedly showed that the company favored its own shopping advertisements more than those of their competitors. The fine is included in "accrued expense and other current liabilities" on Alphabet's Consolidated Balance Sheet.

"Sundar has been doing a great job as Google's CEO, driving strong growth, partnerships, and tremendous product innovation". Pichai has been a Google employee since 2004.