26 July 2019 00:07
Alphabet (GOOG, GOOGL), the parent company for search giant Google, reported quarterly sales results that beat consensus expectations, rebounding after posting soft top-line results during the quarter prior. In the second-quarter report, Alphabet also announced its board had authorized a $25.0 billion repurchase of its Class C common stock. Ahead of results, investors were laser-focused on Google's ad business, which posted weaker-than-expected sales during the first quarter. Alphabet derives most of its company-wide sales from Google's advertising business. Google's ad sales for the second quarter totaled $32.6 billion, an increase of 16% over last year and slightly ahead of consensus expectations for $32.58 billion, based on Bloomberg-compiled estimates.
Prior to Thursday's results, Google's ad revenue had decelerated on a year-over-year basis in each quarter since the second quarter of 2018. Meanwhile, Alphabet saw more of its revenue flow to its bottom line, with traffic acquisition costs comprising a smaller portion of Google advertising revenue than during the year-ago period. Alphabet overall company operating margins improved to 24%, from 18% the quarter prior, and came in ahead of expectations for 22.6%. "From improvements in core information products such as Search, Maps, and the Google Assistant, to new breakthroughs in AI and our growing Cloud and Hardware offerings, I'm incredibly excited by the momentum across Google's businesses and the innovation that is fueling our growth," CEO Sundar Pichai said in a statement. Google's management, during last quarter's earnings call, attributed its first-quarter ad sales growth slowdown to product changes in ads in the past year.
Shares of the company have lagged its peers this year, rising about 10%, compared to about 20% growth for the S&P 500 members broadly. On Thursday, the Texas attorney general's office announced that a bipartisan group of state attorneys general is weighing a range of antitrust actions against big tech companies. Reuters reported last month that the U.S. Federal Trade Commission was gearing up to investigate Google over complaints of anti-competitive behaviour. Facebook Inc (FB.O), along with the release of its earnings on Wednesday, said the FTC had informed it last month that it was under antitrust investigation. Antitrust complaints lodged against Google by rivals and other critics span its advertising, app store, search and other businesses.
Alphabet, Google's parent company, is dealing with an onslaught of controversies, including antitrust scrutiny, employee protests and concerns over everything from extremism on YouTube to its work in China. Alphabet's business recovered in the second quarter, after stumbling during the first three months of the year. In the quarter ended June 30, Google's parent, Alphabet, tallied $38.94 billion in sales, beating analyst estimates of $38.14 billion, the company said Thursday. Earnings per share were $14.21 Analysts on average had expected $11.30 per share, according to Thomson Reuters. "I'm incredibly excited by the momentum across Google's businesses and the innovation that is fueling our growth," Google CEO Sundar Pichai said in a statement Thursday. In the second quarter, the Alphabet continued to pour money into projects that don't make money through advertising. Most recently, the US Department of Justice on Tuesday said it's opening an antitrust probe into the Silicon Valley giants, including Alphabet, to examine the market power of the big tech platforms. The announcement of the broader probe comes months after it was reported in May that the Justice Department is also prepping an antitrust investigation into Google over its search practices and other businesses. In response, Google employees protested the company during San Francisco's Pride parade last month. Google also continues to deal with the fallout from last year's historic walkout over the company's handling of sexual harassment allegations targeted at key executives. (Reuters) - Alphabet Inc reported quarterly revenue and earnings that beat expectations on Thursday, easing concerns about the short-term growth challenges facing Google, YouTube and the company's other advertising businesses even as it faces antitrust investigations. Revenue rose 19% to $38.94 billion, compared to average estimates of 16.82% growth and $38.15 billion in revenue among financial analysts tracked by Refinitiv. Shares rose 6.6% to $1,210.88 following the results in after-hours trade, after closing about flat. The results brought Alphabet closer to the 20% revenue growth it had generated for several years before posting 17 percent growth in the first quarter this year, which had sent shares falling. Alphabet generates about 85 percent of its revenue from tools used in online advertising or the ad space itself. In the first quarter, executives said results were affected by exchange rates for foreign currency, competition and an unspecified product change that had boosted results in the year-earlier period. During the second quarter, Google announced several new advertising tools, including ads on the home page of its Google mobile app as well as new types of ad campaigns spanning YouTube and Gmail. The company's net income for the second quarter rose to $9.95 billion, or $14.21 per share, from $3.2 billion, or $4.54 per share, a year earlier, when it recorded a $5 billion charge related to a fine by European antitrust regulators for abusing its dominance in mobile software. On Thursday, the Texas attorney general's office announced that a bipartisan group of state attorneys general is weighing a range of antitrust actions against big tech companies. Reuters reported last month that the U.S. Federal Trade Commission was gearing up to investigate Google over complaints of anti-competitive behavior.