July 24, 2017 Last Updated 12:55 pm

Google reports that ad revenue increased 18.4 percent in Q2

Lower net income, partially due to the €2.42 billion fine imposed by the European Commission, has the stock falling somewhat in after hours trading

The search giant Google — or more specifically, Alphabet — reported second quarter earnings this afternoon after the bell. The top line is that revenue continue to soar, up another 21 percent in Q2, but net income fell as the company grew its expenses.

This would mean nothing if the stock market were just flat, but it has been rising this year, so investors are taking this opportunity to take some profits, driving down the stock just under 3 percent in after hours trading.

Google’s earnings reports are very different than Amazon’s, which reports later this week. Google gives you lots of numbers but little narrative. Amazon is all narrative. (Apple does it best, one of the few areas were they are good at communicating.)

The biggest factor effecting this quarter’s earnings was the €2.42 billion fine imposed by the European Commission, and the company listed the fine in in “accrued expense and other current liabilities” on our Consolidated Balance Sheet.

The important number for publishers was advertising, and again Google showed that its power, recording $22.672 billion in advertising in Q2, an 18.4 percent increase in ad revenue versus a year ago. This will likely drive more than a few ad directors crazy.

Here is Google’s second report:

MOUNTAIN VIEW, Calif. – July 24, 2017 – Alphabet Inc. today announced financial results for the quarter ended June 30, 2017.

“With revenues of $26 billion, up 21% versus the second quarter of 2016 and 23% on a constant currency basis, we’re delivering strong growth with great underlying momentum, while continuing to make focused investments in new revenue streams,” said Ruth Porat, CFO of Alphabet.

Q2 2017 financial highlights
In order to facilitate comparison of current quarter performance to prior periods, this summary table highlights the impact of the $2.7 billion European Commission (EC) fine, which was accrued in Q2 2017:

The EC fine
On June 27, 2017, the EC announced its decision that certain actions taken by Google regarding its display and ranking of shopping search results and ads infringed European competition law. The EC decision imposes a €2.42 billion (approximately $2.74 billion) fine, which we accrued in the second quarter of 2017. The fine is included in “accrued expense and other current liabilities” on our Consolidated Balance Sheet.

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