What Made Alphabet Earnings, Revenues Jump
Alphabet Inc. (NASDAQ: GOOGL) reported second-quarter 2016 results after markets closed Thursday. The search engine behemoth reported adjusted diluted earnings per share (EPS) of $8.42 on revenues of $21.5 billion. In the year-ago quarter Alphabet posted EPS of $6.99 on…
Alphabet Inc. (NASDAQ: GOOGL) reported second-quarter 2016 results after markets closed Thursday. The search engine behemoth reported adjusted diluted earnings per share (EPS) of $8.42 on revenues of $21.5 billion. In the year-ago quarter Alphabet posted EPS of $6.99 on revenues of $17.73 billion. Analysts were estimating EPS of $8.04 on revenues of $20.76 billion.
The Google segment posted revenues of $21.32 billion, up from $17.65 billion a year ago. Operating income rose from $5.61 billion to $6.99 billion. The operating loss on other (Bets) revenues totaled $859 million, up from $660 million in the year ago quarter.
Revenues at Google websites rose 24% to $15.4 billion and Google Network revenues rose 3% to $3.74 billion. Ad revenues rose 19% to $19.14 billion.
Because Alphabet does not break out the source of advertising revenues, it’s a little hard to draw any conclusion other than a 19% jump is nice indeed. When Facebook reported results on Wednesday the social media giant posted ad revenues of $6.24 of which 84% came from mobile advertising. Alphabet does not appear to be having much luck there, but like we said, it’s hard to tell when comparing apples and oranges.
[nativounit]
Traffic acquisition costs paid to Google Network members rose to 70% of Network revenues, or $2.62 billion. Payments to distribution partners totaled $1.35 billion, about 9% of websites revenues. Total traffic acquisition costs rose to $3.98 billion and were flat year over year as a percentage total ad revenues (21%).
Paid clicks on Google websites were up 37% year over year and up 9% sequentially. Paid clicks on the Network members sites were flat year over year and down 3% sequentially. Aggregate cost per click fell 7% compared with the year ago quarter and was down 1% sequentially.
Capital spending totaled $2.06 billion in the quarter, roughly flat with the year-ago total.
The company repurchased 2 million shares of its Class C common stock for $1.4 billion. Alphabet said it has now completed all authorized share buybacks under its current program.
Alphabet did not provide a forecast, but the consensus second quarter estimates call for EPS of $8.35 on revenues of $21.62 billion. For the full year analysts forecast EPS of $33.48 on revenues of $87.09 billion.
Shares traded up nearly 4% at $795.50 in after-hours trading. The 52-week range is $593.09 to $810.35, and shares closed Thursday at $765.84. Thomson Reuters reported a 12-month price target of $908.93 before the earnings report.
[wallst_email_signup]
Contact [email protected] for any questions or corrections.
Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
