Alphabet, Google’s parent company, reported earnings yesterday. A steep drop in second-quarter profit thanks to a European anti-trust fine, worth $2.75 billion, sent Alphabet’s stock lower.
Shares fell by 3% in the wake of the announcement as the company failed to perform under two major facets: cost per click and traffic acquisition costs.
Cost per click – the sum advertisers pay for each user clocks on an ad given by Google – was down 23% from the previous year.
Traffic acquisition costs totted up to $5.09 billion, higher than the expected $4.75 billion.
However, Alphabet did do better-than-expected on some key facets of business:
Revenue was 15% higher than that of a year ago. The tech-leader is focusing on ‘’dollar growth’’ in revenue and operating income.
Alphabet’s revenue growth is driven by YouTube ads and mobile search ads, eager to pass out Facebook and TV ads to become the leader in digital video ads.
The tech mogul has added 1000 employees with most of them positioned in Google’s cloud business. Alphabet is plunging investment into research and development of its core search product as more people begin to use its service through mobile apps.
Next quarter’s marketing costs are forecasted to increase, caused by higher spending on its cloud business in an effort to promote its hardware products, including its home-automation and smartphones.
By Adrienne Murphy —— Chief Market Analyst, Avatrade