Alphabet Inc. GOOGL-Q beat second-quarter revenue and profit estimates on Tuesday, driven by a rise in digital advertising sales and healthy demand for its cloud computing services.
The shares rose about 2 per cent after dipping slightly in after-market trading. They had gained more than 30 per cent this year.
Net income in the quarter ended June 30 rose 28.6 per cent to US$23.6-billion, besting the average estimate of US$22.9-billion.
Advertising sales, Alphabet’s chief revenue source, rose 11 per cent to US$64.6-billion. The company sells ads in its search product using customer data to better target them.
Alphabet’s results underscore robust demand for digital ads, driven by events such as the Paris Olympics and elections in several countries including the U.S., while a recovery in enterprise spending is boosting is software business.
“This was another stellar quarter from Google with beats across the board,” said Ido Caspi a research analyst with Global X, citing ad sales and artificial-intelligence offerings as drivers.
Revenue grew 14 per cent to US$84.74-billion, compared with analysts’ consensus estimate of US$84.19-billion according to LSEG data.
Revenue from cloud computing services, a widely watched barometer for the health of enterprise technology spending, rose 28.8 per cent to US$10.35-billion. Analysts had expected US$10.16-billion.
Despite heightened regulatory scrutiny, Google had been pursuing its largest acquisition ever, a roughly US$23-billion buyout of cybersecurity firm Wiz. But Wiz told employees on Monday it was walking away from the deal and would instead pursue going public.
Google also held talks to acquire customer relationship management firm HubSpot before walking away from it earlier this month. The deal would have turned Alphabet into a rival of Salesforce, Oracle and others in that market.
Google said on Monday it is planning to keep third-party cookies in its Chrome browser backtracking function after years of pledging to phase out the tiny packets of code used to track internet searches.
It marked a major reversal after advertisers expressed concerns that the loss of cookies would limit their ability to collect and parse information for personalizing ads, making them dependent on Google’s user databases.
Sales for the Mountain View, Calif., company’s so-called “other bets,” including experimental projects and its self-driving car unit Waymo, rose 28 per cent to US$365-million.
Ad sales in its YouTube division rose 13 per cent to US$8.67-billion.