On Thursday, Oct. 27, Google parent Alphabet Inc. reported stronger-than-expected quarterly earnings and revenues helped by strong advertising sales on rising star YouTube and mobile platforms.
Google Strong Earnings And Revenues
According to Reuters, encouraged by the strong reported results, the search company Google authorized a $7 billion repurchase of its Class C stock. By market value, Alphabet is now the world's second company. After reporting the strong earnings and revenues results, the shares of Google parent Alphabet were up 1.6 percent in after-hours training.
The fast-growing mobile advertising market is dominated today by Alphabet, along with Facebook Inc. On revenue of $22.45 billion, Alphabet reported third-quarter adjusted earnings per share of $9.06. Market analysts expected revenue of only $22.05 billion and earnings of just $8.63 a share.
There were some concerns whether Google will be able to switch its vast web advertising business toward mobile. After Google parent Alphabet reported its outstanding earnings and revenue results, analyst Kerry Rice of Needham & Co noted that the Wall Street is now reassured by company's recent performance that the transition is well underway. Rice stated that Google is among the best positioned companies to take advantage of the internet's future.
In the third quarter, Google's ad revenue rose to $19.82 billion or by 18.1 percent. Compared with 89.8 percent of revenue in the second quarter, now the company's ad revenue is accounting for 89.1 percent of Google's total revenue.
Compared with a rise of 29 percent in the second quarter, paid clicks rose 33 percent. After dropping 7 percent in the second quarter, cost-per-click fell 11 percent in the latest period. Market analysts had expected on average a decline of only 7.9 percent.
Rising Star YouTube
In Google's cast of services, YouTube has emerged as a break-out star. For a younger generation of viewers looking for news, music and entertainment on their smartphones, the online video site upstages cable television. According to the website whio.com, this trend is contributing to a shift in advertising away from traditional network television programming to the more diversified and eclectic mix of video clips ranging from shots of street violence to cute cat videos found on YouTube.
The already hugely profitable Google is becoming even more prosperous as more advertising dollars flow to YouTube. And all that money is funding Google with more financial resources to buy the rights to stream cable networks' shows on YouTube. This is, in turn, likely to attract in even larger audiences. It also is helping to finance Alphabet Inc.'s investments in various projects ranging from internet-beaming balloons to self-driving cars.
Since Google bought the video site for $1.76 billion a decade ago, YouTube already has proven to be one of the best bets that the search giant company has ever made. Back in those days, YouTube consisted mostly of clips pirated from movie and TV studios and crudely made videos shot by amateurs. Since Google took control in November 2006, the internet video platform has evolved into a far more polished channel and it had built around a worldwide audience that has surpassed 1 billion.
It is estimated that around 80 percent of the YouTube viewers are located outside the U.S. YouTube also reaches more people in the "millennial" generation (between the ages of 18 and 34 years old) than any cable network. As a result, more than half its video clips are watched on mobile devices, the favorite platform of the "millennials." As more major advertisers promote their brands on YouTube, It is expected that the site will continue to grow in importance in Google's business mix.
