Alphabet Inc (NASDAQ:GOOGL) reported a 27.7 percent drop in quarterly profit as the company recorded a previously announced charge related to a record $2.7 billion fine imposed on its Google unit by the EU.
Continue Reading Below
EU antitrust regulators last month hit Google with a record 2.4-billion-euro ($2.7 billion) fine for favoring its own shopping service, taking a tough line in the first of three probes of its dominance in searches and smartphone operating systems. The company's shares, which closed marginally up in regular trading on Monday, fell nearly 3 percent to $969 after the bell. The shares had gained nearly 26 percent this year through Monday's close.
On a consolidated basis, revenue rose about 21 percent to $26.01 billion in second quarter ended June 30, beating the analysts' average estimate of $25.65 billion, according to Thomson Reuters I/B/E/S. Revenue was boosted by robust demand for advertising on mobile and the company's popular video service YouTube. Google's ad revenue, which accounts for a lion's share of its business, rose 18.4 percent to $22.67 billion.
The company faces intensifying competition from social media giant Facebook (NASDAQ:FB) for advertising dollars. The companies together dominate the online ad market. This year, Google is expected to generate about $73.75 billion in net digital ad revenue worldwide, a 17.8 percent jump from a year earlier, according to research firm eMarketer. Paid clicks, where an advertiser pays only if a user clicks on ads, rose 52 percent. Analysts on average had expected a rise of 35.2 percent, according to data and analytics firm FactSet. Paid clicks rose 44 percent in the first quarter. Revenue from its Google Other unit, which includes Pixel smartphone, Play Store and cloud business, rose 42.3 percent to $3.09 billion.
The company's net income fell to $3.52 billion, or $5.01 per Class A and B share and Class C capital stock, in the second quarter from $4.88 billion, or $7 per share, a year earlier. Analysts had expected earnings of $4.49 per share. The company changed the method it reports earnings in the first quarter, focusing on Generally Accepted Accounting Principles (GAAP) earnings instead of non-GAAP results.
(Reporting by Rishika Sadam in Bengaluru; Editing by Sriraj Kalluvila) ((Rishika.S@thomsonreuters.com;)(within U.S. +1 646 223 8780, outside U.S. +91 80 6749 6997)(; Reuters Messaging:)(Reuters Messaging: email@example.com))
(C) Reuters 2017. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters.Alphabet Inc