Alphabet reports 21% increase in Q2 revenue, stock soars

Google’s parent company Alphabet reported a 21% surge in second quarter revenue year-on-year.

Consolidated revenue grew 25% in constant currency, driven by increased use of mobile search by users in addition to solid growth in desktop and tablet strength.

Alphabet reported earnings of $8.42 per share on revenues of 21.5 billion, beating what analysts had forecast of $8.04 per share on revenues of $20.76 billion.

US revenue increased 25% to 10 billion, UK revenue was up 14% to 1.9 billion, while rest of world revenue rose 19% to 9.6 billion. Advertising revenue rose 19% year-over-year.

Net income was $4.9 billion on a GAAP basis and $5.9 billion on a non-GAAP basis.

Earnings per diluted share were $7.00 on a GAAP basis and $8.42 on a non-GAAP basis.

Alphabet_Q2_2016

Three Months Ended
June 30, 2015
Three Months Ended
June 30, 2016
Revenues $17,727 $21,500
Increase in revenues year over year 11 % 21 %
Increase in constant currency revenues year over year 18 % 25 %
GAAP operating income $4,825 $5,968
GAAP operating margin 27 % 28 %
Non-GAAP operating income $5,957 $7,471
Non-GAAP operating margin 34 % 35 %
GAAP net income $3,931 $4,877
Non-GAAP net income $4,829 $5,864
GAAP diluted EPS for Class A and B common stock $4.93 $7.00
GAAP diluted EPS for Class C capital stock $6.43 $7.00
Non-GAAP diluted EPS for Class A and B common stock and Class C capital stock $6.99 $8.42
Diluted shares (in thousands) * 696,847

Source: Alphabet



Ruth Porat, Google Chief Financial Officer & Senior Vice President, said during the company’s second quarter earnings call:

“Year-on-year growth reflects substantial strength in Mobile Search due to the ongoing benefit from the improvement in ad format and delivery that we launched in the third quarter of last year. We continue to have solid growth from Desktop and Tablet Search.

“YouTube revenue continues to grow at a very significant rate, driven primarily by video advertising across TrueView and increasingly Google Preferred, with a growing contribution from buying on DoubleClick Bid Manager.

“Network revenue was $3.7 billion, up 3% year on year and up 1% sequentially, continuing to reflect the strong growth of programmatic offset by the traditional Network businesses.”



Mobile search gave Alphabet a huge boost in the quarter, as advertisers invested 63 percent more in mobile search ads during the period, compared to all-platform search-ads up 10 percent.

Alphabet’s shares soared by over 5 percent in after-hours trading on Thursday, reaching $809 per share.

Investment banking and asset management firm JMP increased Alphabet’s price target to $928 from $904 with a “market outperform” rating.

“We emerge from Alphabet’s second quarter encouraged with the overall results and feel the newer ad products launched on its revamped AdWords platform can lead to continued strong growth going forward,” JMP wrote in the analyst note.

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