Google's parent firm Alphabet smashes profit expectations to send shares soaring

Rebecca Smith
Cycling Routes And Directions Added To Google Maps
Alphabet's Google was hit by a €2.4bn antitrust fine over the summer (Source: Getty)

Among tonight's wave of results from US tech giants, Google's parent firm, was among those toasting a bumper quarter.

The company's shares rose three per cent in after-hours trading, to $1,020, after Alphabet reported a 24 per cent rise in revenue on mobile advertising.

The figures

Diluted earnings per share came in at $9.57, which surpassed expectations, while net income rose from $5.1bn to $6.7bn.

On a consolidated basis, the firm's revenue rose to $27.77bn for the third quarter ended 30 September.

Ad revenue meanwhile, rocketed by a fifth to $24.07bn.

Paid clicks, where an advertiser only coughs up with the money if a user clicks on adds, rose 47 per cent.

Total traffic acquisition costs, a measure of how much money the firm spends to attract users to its search engine, also rose by 31.6 per cent.

Alphabet's patchier Other Bets division, incorporating separate businesses such as its Waymo driverless carunit, and Nest, also had positive news, with losses narrowing from $861m to $812m.

Read more: Google's building its own smart city in Toronto. Why not London next?

Why it's interesting

Gradually rising traffic acquisition costs, which were up 28 per cent in the second quarter, compared to a 23 per cent rise in revenue from Google sites, were expected to be on investors’ minds. They rose today, but investors were feeling buoyed by the rush of good news elsehwere in the firm's results.

Sepatately today, the tech giant also announced its driverless car unit Waymo is expanding winter testing as it tries to iron out the potential difficulty of snowy and icy conditions for autonomous vehicles.

What the company said:

Ruth Porat, chief financial officer of Alphabet, said:

We had a terrific quarter, with revenues up 24 per cent year on year, reflecting strength across Google and Other Bets.

Our momentum is a result of investments over many years in fantastic people, products and partnerships.

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