Alphabet, Google’s new parent company, beats third-quarter earnings forecast
Google’s mobile business is key to its growth, analysts say.
Alphabet Inc., the recently created parent company of Google Inc., topped earnings estimates in the third quarter, grossing $18.7 billion in revenue, the company said Thursday.
The earnings amounted to 13% year-on-year growth for the tech giant and beat analyst expectations of $18.54 billion in revenue, according to a Thomson Reuters survey.
Profits came in at $4.7 billion, up from $3.7 billion a year ago.
Alphabet reported earnings of $7.35 per share adjusted for expenses, topping the Thomson Reuters survey predicting earnings of $7.21 per share.
The third-quarter results “show the strength of Google’s business, particularly in mobile search,” said Ruth Porat, chief financial officer of Alphabet and Google. “With six products now having more than 1 billion users globally, we’re excited about the opportunities ahead of Google, and across Alphabet.”
The results will please analysts and shareholders who viewed the company’s mobile strategy as a soft spot. The company, which relies heavily on ad revenue generated by searches on personal computers, has found it difficult adapting to a mobile environment where the cost-per-click of an ad has been in decline.
Mobile search has surpassed searches on computers. Google has countered by introducing more mobile products.
The company has boosted the number of ads it displays on mobile searches and allowed app developers to pay for placement in the Google Play store to reach more users.
In September, Google introduced Customer Match, which allowed advertisers to target consumers more precisely using email data.
Alphabet shares soared over 10% in after-hours trading after closing at $651.79, up $9.18 or 1.43%.
The company also authorized the buyback of $5 billion in Class C stock.
Thursday’s earnings call was the first for the company since Alphabet was established to separate Google’s core search business from its so-called moonshot initiatives, such as high-altitude balloons to spread Internet access and its biotech division, Calico.
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