The parent company of Alphabet Inc. Google (NASDAQ:GOOGL) posted their quarterly results on Thursday, revealing an impressive 29 percent increase in profit based on strong advertisement sales. The $5.43 billion profit for the quarter was more than the expectations of analysts. They are saying the result is “exceptional”.
The results show Google’s core advertising business continues to grow at an extraordinary rate. Issues like the boycott of YouTube by some advertisers had little impact on the results. Colin Gillis, an analyst at BGC Partners said reacting to the results, “For a company of Google’s size to post the growth that it has is just a testament to the quality and usefulness of the products they make. They are the dominant force in digital advertising”.
Revenue and Net Income Is More than the Market Expectations
Google’s revenue for the quarter has gone up by 22.2 percent to reach $24.75 billion. Last year, in the same quarter, this was $20.26 billion. Paid clicks, where advertisers pay only when there is a click is up by 44 percent. Analysts had predicted this to go up by 29.7 percent. Net income stands at $5.43 billion from the $4.21 billion of last year. The net income in this quarter is equivalent to $7.73 for each share. Last year, this was $6.02 per share.
The non-advertising revenue of Google, consisting of the Play store, Pixel smartphones, and the cloud computing business also went up dramatically by 49.4 percent in the quarter to reach $3.10 billion.
Backed by strong investor confidence, the Google stock went up and reached $937 after the bell on Thursday.
Google and Facebook Are Driving the Market Growth
Facebook and Google now dominate the industry growth in digital advertising. In fact, together they accounted for 99 percent of the growth last year according to a report published by Pivotal Research this week. They have both shifted the focus to mobile advertising, and it is showing good results. The two have so much control of the market that a few advertisers are now complaining of a duopoly.
This year, Google (NASDAQ:GOOGL) is expected to have a 61.6 percent share of the search advertising market around the world, which is more than the 60.6 percent of last year according to the research firm eMarketer. Mobile advertisements are cheaper than desktop, but thanks to growing volume, the business is making up the difference.