Google’s parent company, Alphabet (NASDAQ: GOOGL) stocks up over 4% on Thursday during after-hours trading when the company announced earnings per share of $8.42 beating expectations by $0.38 and revenues of $21.5 billion beating projections by $740 million. Aggregate paid clicks rose 29% compared to last year’s same quarter, along with paid clicks on the company’s websites up 37% year-to-year.
Google is maintaining such growth partly because the company has been able to capture users and advertisers as they shift to mobile devices from traditional desktop computers. Google’s Android smartphone software gives its search engine and other services top billing on more than a billion devices, while the company also pays Apple Inc. to make Google the default search engine on iPhones.
Google also faces new competition from the success of products like Amazon.com Inc.’s Echo. These devices give people a digital assistant that skips Google searches and goes straight to Amazon for product queries and other questions. "Although we argue Google has superior language processing capabilities, the question arises if ‘good enough’ solutions start to chip away at standard queries," wrote James Cakmak, an analyst with Monness Crespi Hardt & Co., in a note circulated before earnings.
Google, along with Facebook Inc., dominate the digital ad business. Thursday’s results follow better-than-expected earnings and sales from Facebook Wednesday. These two internet giants have been trying to beef up ad revenue from video and mobile businesses, both of which were a little less profitable than its desktop business until last year.
Cost reduce have also been a recent focus since the arrival of former Morgan Stanley executive Ruth Porat as finance chief in 2015. Investors cheered Ruth Porat’s employ, wishing she would step up scrutiny of Alphabet’s costs. The total expenses during the second quarter rose 20% to $15.53 billion, a slightly slower pace than revenue grew. Moreover, Google mentioned that in the second quarter, it repurchased 2 million Class C shares for an aggregate amount of $1.4 billion.