Alphabet, Google’s parent company, posted its second-quarter 2016 earnings today, revealing $21.5 billion in revenue and $8.42 earnings per share — above analysts’ expectations of $20.76 billion in revenue and $8.03 earnings per share.
The company’s stock was up 0.56 percent in regular trading. But in after-hours trading, it was up another 5 percent (expected, given the strong results).
“Our terrific second quarter results, with 21 percent revenue growth year on year, and 25 percent on a constant currency basis reflect the successful investments we’ve made over many years in rapidly expanding areas such as mobile and video,” Alphabet CFO Ruth Porat said in a statement. “We continue to invest responsibly in support of our many compelling opportunities.”
But the same concerns remain. Alphabet’s cost-per-click (how much money is generated for each advertising click) continues to decrease, down 7 percent year-over-year for Q2 2016.
It’s also worth underlining the company’s traffic acquisition costs (TAC). These are Alphabet’s core expenses paid to third-party networks — they have been rising over recent years, putting pressure on the company to earn more per ad. For Q2 2016, total TAC was $3.98 billion, up from $3.38 billion a year ago and also up from $3.79 billion in Q1 2016.
Today marks nearly a year since Larry Page announced his plan for Alphabet, putting Sundar Pichai in charge of Google and setting loose the company’s side bets to experiment in a way that’s at least a little transparent to investors.
Google, a subsidiary of Alphabet, was (again) responsible for more than 99 percent of the company’s total revenue — or $21.3 billion. Google officially morphed into Alphabet in October 2015, but the company didn’t begin reporting under the new Alphabet structure until February. That’s when we learned just how much of Alphabet’s revenue comes from Google: more than 99 percent.
The other parts of Alphabet — Nest, Fiber, X (formerly Google X), GV (Google Ventures), etc. — are simply defined as “Other Bets” in the company’s quarterly earnings report. During Q2 2016, these Other Bets drove $185 million in revenue while costing the company $709 million. By comparison, Other Bets brought in $166 million in revenue in Q1 2016, while costing the company $802 million.