Alphabet reports huge hike in Google profits, driven by mobile search ads and YouTube

Alphabet reports healthy profits for its third quarter

Google parent company Alphabet has revealed that the search firm’s profits soared almost 50 percent in the third quarter of its fiscal year.

Net income for Google was $3.9bn for the quarter, a 44 percent jump from $2.7bn in the same quarter a year earlier, driven mostly by YouTube and advertising revenue from mobile searches.

Google saw a decline of 16 percent in the average price for adverts on its websites, but this was balanced by a 23 percent hike in ad clicks, so online advertising revenue remained positive.

Ruth Porat, chief financial officer at Alphabet, attributed the advertising success to ads on mobile searches.

“Year-on-year and quarter-on-quarter growth reflect substantial strength in mobile search due to ongoing improvement in ad formats and delivery to better address how consumers use mobile devices,” she said in a conference call discussing the Google Q3 earnings.

Total revenue was $18.6bn for the quarter, a rise of 13 percent from the $16.5bn in the same period in 2014.

This strong financial performance saw Alphabet’s share price jump by 11 percent in after-hours trading to a record high of $722.53.

Google’s strong performance appears to have prompted Alphabet to buy back some of its stock. The Alphabet board has authorised a decision to acquire $5,099,019,513.59 worth of shares in the fourth quarter of 2015.

This number is a reference to the square root of 26, the number of letters in the English alphabet. The parent company is clearly in a position to enjoy the fruits of Google’s search and advertising revenue.

Alphabet will report its financial results separately from Google’s from January next year, so its revenues and profits will take a significant hit.

However, separate reporting should show how well Alphabet’s more unusual divisions, such as the experimental Google X research and development business, are performing in terms of revenue.

Google’s own performance will doubtless continue to see success, particularly given how regularly the firm adjusts the way it presents adverts to capitalise on revenue opportunities, notably on mobile devices.

Google recently purchased 360-degree photography firm Digisfera in a move to boost Street View, and it is likely that the company’s products will be more attractive to users and thus generate more revenue.

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23 October 2015 | 1:59 pm – Source: v3.co.uk

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