Google parent Alphabet reports 20% rise in quarterly revenue

Google parent Alphabet reported a 20.2 per cent rise in quarterly revenue on Thursday, helped by robust sales of advertising on mobile devices and YouTube, and the search company authorised a $7 billion repurchase of its Class C stock.

Alphabet, along with Facebook, dominates the fast-growing mobile advertising market.

Shares of Alphabet, the world’s number two company by market value, were up 1.6 per cent in after-hours trading. Google has been dogged by concerns about how it would nudge its vast web advertising business toward mobile, but the company’s recent performance has reassured Wall Street that the transition is well underway, said analyst Kerry Rice of Needham & Co.

“They are just one of the best-positioned companies for the future of the internet,” Mr Rice said.

Google’s advertising revenue rose 18.1 per cent to $19.82 billion in the third quarter, accounting for 89.1 per cent of Google’s total revenue, compared with 89.8 per cent of revenue in the second quarter.

Cost-per-click

Paid clicks rose 33 per cent, compared with a rise of 29 per cent in the second quarter. Paid clicks are those ads on which an advertiser pays only if a user clicks on them. Cost-per-click, or the average amount advertisers pay Google, fell 11 per cent in the latest period after dropping 7 per cent in the second quarter.

Analysts on average had expected a decline of 7.9 per cent, according to FactSet StreetAccount. Per-click costs have been falling as people shift to mobile devices from desktops.

Because of the limited space, advertising on mobile devices is generally cheaper. Investors are willing to forgive the falling cost-per-click for now as it suggests strong mobile growth, Mr Rice said.

Revenue

“Over the last few quarters it seems investors have worried less about that as long as paid clicks are also going up,” he said.

Research firm eMarketer has estimated that Google will capture $52.88 billion in search ad revenue in 2016, or 56.9 per cent of the global market. Google's Other Revenue, which includes the company's increasingly important cloud business, jumped 38.8 per cent after rising 33 per cent in the second quarter. The cloud business competes with services offered by market-leader Amazon. com , Microsoft and IBM. Reuters