Alphabet, the new parent company of Google, will spend over $5bn (£3.3bn) on an enormous share buyback, the first time the company has returned some of its swelling cash pile to shareholders. Shares climbed by around 10% after the company also unveiled better-than-expected profits. Google’s third-quarter report showed profits surging 45% to nearly $4bn – […]
Alphabet, the new parent company of Google, will spend over $5bn (£3.3bn) on an enormous share buyback, the first time the company has returned some of its swelling cash pile to shareholders.
Shares climbed by around 10% after the company also unveiled better-than-expected profits.
Google’s third-quarter report showed profits surging 45% to nearly $4bn – boosted by mobile search advertising and slowing growth in operating expenses.
Revenue rose 15% on the same period last year and investors responded – with Alphabet’s share price rising more than 10% after-hours.
Revenue rose 13% to $18.68 billion. Excluding money Google pays to other companies including Apple Inc. for sending it search traffic, Alphabet’s revenue was $15.1 billion. On that basis, Wall Street was looking for net revenue of $15.04 billion, according to RBC Capital Markets.
Excluding currency fluctuations, Alphabet said third-quarter revenue rose 21% from a year earlier. That was faster than 18% year-over-year growth in the second quarter.
As the world’s largest digital-advertising company Alphabet’s Google business is benefiting from surging online activity. The Interactive Advertising Bureau said Wednesday that US online-ad revenue rose 19% in the first half of the year. Search advertising accounts for the largest portion of this revenue and Google’s dominant search engine helps the company scoop up the lion’s share.
Alphabet said the number of paid clicks on the websites it owns increased 35% over the year-ago quarter. The average amount advertisers paid for each click fell 16%, pushing revenue from company-owned websites up 16%.
Google recently announced a radical overhaul of its corporate structure, saying it would split its massively profitable core business from its research divisions such as its robotics arm and medical research unit, all under the Alphabet parent company.
Analysts said the performances had lifted lingering concerns about a weak quarter after some disappointing early results and the Nasdaq and wider markets were likely to see the benefit during Friday’s trading.
The new holding company was created to oversee the growing mix of businesses which have sprung up on the back of Google’s search dominance.
In January, Alphabet will report Google’s financial numbers separately.
