Though Google parent Alphabet (GOOG, GOOGL) has long been ramping up its non-core businesses, programmatic advertising and mobile search continue to drive revenue growth. When the Menlo Park, California-based tech giant reports its second-quarter results on July 23 after the market closes, investors will be looking for earnings of $9.51 per share on revenues of $25.85 billion.
Over the past year, the primary concern with regard to Alphabet’s financial performance has been the rising traffic acquisitions cost. Other Bets, the company’s loss-making robotics division, improved its position in recent quarters and is on its way to achieving breakeven. Moreover, Other Bets has become a less significant segment after Nest was removed from it and incorporated into Google.
Things changed a bit for Alphabet after European Union regulators slapped a multi-billion dollar fine on it last year for abusing the search platform. Though the company shrugged off the huge penalties, including the record $5-billion fine it suffered this week, experts believe the latest developments would ultimately change the way people use Google.
The primary concern with regard to Alphabet’s financial performance remains its rising traffic acquisitions cost
There is no doubt that some serious questions will be thrown at Google CEO Sundar Pichai at the upcoming earnings call, amidst concerns among investors that curbs on Android could impact mobile search revenues in the long run.
The outlook for the June-quarter remains bullish when growth is expected to be consistent in all geographic regions. Meanwhile, one cannot miss the management’s aggressive efforts to ramp up its cloud business, an area that offers boundless possibilities. During the last earnings call, Pichai had said Google Cloud “is signing significantly larger, more strategic deals.”
The other areas of innovation, including home automation and artificial intelligence, also continue to contribute to the overall revenue growth.
In the first quarter, Alphabet’s earnings and revenue spiked and surpassed estimates. While overall performance remained centered around the search service, growth was restricted by higher traffic acquisition costs and spending on real estate.
Alphabet shares hit an all-time high this week and are hovering near the $1,200-mark. After gaining nearly 12% since the beginning of 2018, the stock ended Thursday’s regular session down 1%.
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