Of that revenue, $19.1 billion came from Google’s advertising business, up from $16 billion a year ago. “Mobile is the engine that drives our present”, said chief executive Sundar Pichai.
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“We are extraordinarily well positioned to take advantage of the mobile shift, and we are already seeing strong growth in three key areas of our advertising business, mobile search, video and programmatic”, Pichai said.
Many analysts credit her with keeping expenses in line and for giving shareholders more visibility into Google’s spending.
“The internet is one of the world’s most powerful equalisers and for making information available for everyone wherever they are”, Mr Pichai said.
In addition to growing advertising sales, Google is pushing ahead with research into machine learning and artificial intelligence. Advertisers typically paid less for user clicks on mobile ads than on desktop ads, Google’s traditional strength, but the strong earnings performance suggested that was beginning to change, he said.
But, for now, it is costing Google way more than it makes back from sales.
The company’s shares surged more than 6 per cent in after hours trading, before easing to trade up about 3 per cent. Analysts on an average were expecting revenue of $20.76 billion, according to Thomson Reuters I/B/E/S. Cost per click was down 7% on past year, but paid clicks were up 29%. However, after this major profit from the first trade of Google, the parental group Alphabet is introducing its exchange this time. Cost-per-click on ads served is trending downward, but because mobile devices have opened up so many new advertising opportunities, the decline in cost-per-click is more than offset by a dramatically higher volume of ads served.
Almost all of of Alphabet’s revenue comes from Google, and the vast majority of its subsidiary’s revenue comes from its advertising business, whether that’s banner ads on websites, text ads on Google searches, or ads on YouTube videos.
Alphabet stock has had a sluggish year, sliding 1.6% in 2016, partly because the company has struggled to meet expectations.
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And then there is a segment called “other bets”, which includes Calico Life Sciences, the company’s Fiber internet access business, Nest and moonshots like self-driving cars – the things that long made investors wonder: Wait, what’s Google doing now?
