Alphabet Inc (GOOG): Mobile Business Drives Google 3Q Earnings

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Alphabet Inc (NASDAQ:GOOGL) (NASDAQ:GOOG) reported that the third-quarter financial results of Google was strong, driven by its mobile business.

Google financial results

Alphabet announced that Google recorded GAAP earnings of 4.7 billion or $5.73 per share and non-GAAP earnings of $6.1 billion or $7.35 per share for the third quarter.  The search engine giant’s revenue increased 13% to $18.7 billion year-over-year.

Wall Street analysts expected Google to report non-GAAP earnings of $7.21 per share and $18.53 billion in revenue for the third quarter.

In a statement, Ruth Porat, CFO for both Alphabet and Google said, “Our Q3 results show the strength of Google’s business, particularly in mobile search. With six products now having more than 1 billion users globally, we’re excited about the opportunities ahead of Google, and across Alphabet.”

During the quarter, Google websites achieved $13.08 billion in revenues, an increase of 16% from last year. Revenue from Google Network members climbed 4% to $3.69 billion. Its total advertising revenue rose 13% to $16.78 billion while other revenues increased 11% to $1.89 billion.

Google said its operating cash flow was $6 billion and traffic acquisition cost (TAC) was $3.34 billion. Its GAAP and non-GAAP operating margins were 23% and 32%, respectively.

Google CEO Sundar Pichai said those six products include Search, Maps, Chrome, YouTube, Android and Google Play.

Google already indexed 100 billion apps

Pichai disclosed that Google already indexed more than 100 billion apps. User will now be able to see numerous results for mobile app not just websites when entering a query on the company’s search engine.

Johnny Won, founder of Hyperstop, a consultancy firm, commented, “There is growth in virtually every category and even though cost-per-click continues to go downward, there seems to be robust revenue growth especially around mobile search,” Won said.

“This keeps Google in the position of power since it is what users want but it’s also a reminder that Apple is doing nearly the same thing in iOS 9 without using Google at all,” Won said. “Deep linking has just begun for mobile search queries, but it’s unclear how Google will be as relevant on Apple iOS as it is on desktop.

Alphabet stock performance

Following the release of Google quarterly earnings, the Class A and Class C shares of Alphabet surged during the extended trading on Thursday.

Alphabet’s Class A shares (GOOGL) climbed more than 9% to $734.11 a piece while its Class C shares (GOOG) increased 11% to $723.55 each around 6:03 in the afternoon in New York.