Google Search and YouTube Drove Alphabet’s Third-Quarter Revenue Growth

Aggregate clicks are up, cost-per-click down

A year after Google spelled out its plans to evolve into Alphabet Inc., legacy products including search and YouTube continue to be the biggest revenue generators for the company.

According to its third-quarter earnings announced today, Alphabet once again beat analysts' estimates, reporting total revenue of $22.5 billion, a 20 percent increase over the same period last year. Earnings on a per-share basis totaled $9.06, up from $7.35 during the third quarter of 2015. (Analysts had expected total revenue of $22.05 billion and earnings per share of $8.63.)

On an earnings call with investors Thursday, Alphabet CFO Ruth Porat said the quarterly earnings were driven by growth in both search and YouTube.

"We had a great third quarter, with 20 percent revenue growth year on year, and 23 percent on a constant currency basis," Porat said in a statement. "Mobile search and video are powering our core advertising business and we're excited about the progress of newer businesses in Google and Other Bets." 

Advertising revenue for Google during the third quarter totaled $19.8 billion, up 18 percent from $16.8 billion last year. Aggregate paid clicks in the third quarter also increased, growing 33 percent year-over-year, while paid clicks on Google websites grew by 42 percent.

Aggregate cost-per-click decreased 11 percent, falling 13 percent on Google websites and 14 percent on Google network members' websites.

On the earnings call, Google CEO Sundar Pichai mentioned that Google's six-second "bumper" ads have shown strong results for marketers such as Universal Pictures.

Losses from other ambitious, long-term bets, or "moonshot" projects, like self-driving cars, cost Alphabet $865 million in the third quarter, a smaller loss than the $980 million it reported a year prior.

"As we reach for moonshots that will have a big impacts on the longer term, it's inevitable that there will be course corrections along the way," Porat said on the earnings call.

Earlier this month, Google made its debut in the hardware industry with several new products. in addition to launching Pixel, Google's first self-branded smartphone, the company introduced a new virtual-reality headset, voice-activated assistant and Wi-Fi router.