Google Parent Alphabet's Profit Grows 33%

By Jack Nicas Features Dow Jones Newswires

Google parent Alphabet Inc.'s third-quarter profit grew 33%, extending strong growth in the tech giant's advertising business as increased scale helped it overcome pressure from declining ad rates.

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Alphabet on Thursday said profit reached $6.73 billion in the quarter, compared with $5.06 billion a year earlier. Net revenue rose 24% to $27.77 billion.

Alphabet's earnings were $9.57 a share, beating Wall Street estimates of $8.31 a share.

Alphabet's shares rose 4.2% in after-hours trading. Its shares have risen 25% this year.

Aggregate cost-per-click, which is how much advertisers pay for user clicks on links, declined 18%.

Google is depending more on users clicking on ads in its mobile search results and before YouTube videos, clicks that carry lower margins than desktop search ads that drove its business for years. That is in part because of so-called traffic acquisition costs, or fees Google pays to smartphone makers to put its search engine and apps front and center on their devices, as well as to video creators and website owners whose content Google runs ads against. The more Google relies on mobile and YouTube ads, the more it pays in traffic-acquisition fees, putting pressure on its profit margins.

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Write to Jack Nicas at jack.nicas@wsj.com

(END) Dow Jones Newswires

October 26, 2017 16:43 ET (20:43 GMT)