Google Increased Its Paid Clicks by 52 Percent in the Second Quarter

Advertising revenue totaled $22.67 billion

Google parent company Alphabet's total revenue was $26 billion.
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Google’s parent company, Alphabet, yet again beat financial expectations with its second-quarter earnings, bringing in $26 billion in revenue for the three-month period, an increase of 21 percent from the second quarter of 2016. Earnings per share totaled $5.01, beating Wall Street’s forecast of $4.46 per share.

According to its earnings statement released today, the company brought in $22.67 billion in advertising revenue in the second quarter, an increase of $3.53 billion from the same same period the previous year. Aggregate paid clicks also increased, jumping 52 percent, while paid clicks on Google’s properties jumped 61 percent. Meanwhile, aggregate cost per click fell 23 percent and cost per click on Google’s properties fell 26 percent.

“We’re delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams,” Ruth Porat, Alphabet’s chief financial officer, said in a statement.

Google also increased revenue on its “other bets”—moon-shot projects not yet released to advertising such as self-driving cars, virtual reality and smartphones—with revenue in the second quarter totaling $248 million, driven in the quarter by Cloud, Play and other hardware, according to the company. Total revenue for other bets in the second quarter of 2016 was $185 million.

Despite the tech giant’s overall growth, the second quarter also came with a massive regulatory price tag after the European Union stuck the company with a $2.7 billion fine for antitrust violations related to giving Google’s own services preference over its rivals. The New York Times last month reported that the record fine was twice the size of the previous largest penalty.

In an email earlier today, James Cakmak, an analyst with Monness, Crespi, Hardt & Co., said he thought the EU crackdown was “more posturing.” However, if the U.S. takes similar action in the future, it could be something to watch.

“Fines are one thing; forcing change on business practices is another,” Cakmak wrote. “Bottom line, we’re optimistic for resolution with the risks limited to dollars and not opportunity costs. Second, we believe there is an ever-growing need for paid search advertising given consumer consumption patterns on mobile, thereby limiting the effectiveness of organic results. Said another way, we see the future as increasingly driven by search engine marketing (SEM) and decreasingly search engine optimization (SEO). Hence, the wind is very much at Google’s back.”