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Google has reported its second quarter results for the year 2017. The California based technology company says its fastest growing business is the cloud business, which means the growth refers to Google’s productivity tools in G suite and the Google cloud platform. There have also been new additions in headcounts in the quarter as the company sized up by 1614 new hires. Parent company Alphabet reported a 27.7% drop in quarterly profit as the company recorded a previously announced charge related to a record $2.42 billion Euros fine imposed on its Google unit by the EU.
"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.
During the second quarter (on June 27) Google was fined by the European Commission regarding the display and ranking of shopping search results and ads that infringed European competition law. The EC imposed a fine of 2.42 billion Euros, which was included in the accrued expenses and other current liabilities of the consolidated balance sheet. Though the EC fine has failed to dent Google’s growth, the profit has recorded a decline. According to reports, analysts were anticipating earning of $4.46 per share and revenue of $25.64 billion.
Q2 2016 vs Q2 2017 (YOY)
We make a comparison between the second quarter last year (2016) and this year (2017) to see a year on year differentiation in the growth of Google:
In terms of paid clicks and cost-per-click information the aggregate paid clicks have grown 52 per cent, paid clicks on Google websites have grown 61 per cent while the paid clicks on Google Network Members’ websites has grown 9 per cent. The aggregate cost-per-click has grown 23 per cent, the cost-per-click on Google websites have grown 26 per cent while the cost-per-click on Google network members’ websites have grown 11 per cent.
The traffic acquisition costs (TAC) to Google Network members and distribution partners can also be compared year on year. TAC to Google Network members at the end of the second quarter last year was recorded at $2,623 million compared to $3,042 million this year. There has been a two per cent rise in the TAC to Google network members as percentage of Google network members’ properties revenues. TAC to distribution partners has grown by $697 million to $2,049 million this year as compared to the second quarter’s $1,352 million last year. The TAC to distribution partners as percentage of Google properties revenues has grown by two percent up 11 percent as compared to 9 percent in the same time last year. The total traffic acquisition costs have grown by $1,116 million to $5,091 million as compared to $3,975 million last year.
Alphabet’s operating losses is recorded at $772 million as compared to last year’s, $855 million. The operating income has grown by $813 million to $7803 million as compared to $6990 million. Alphabet's "other bets" division — which includes acquisitions like Nest and other longer-term projects being developed through its X lab has grown by $63 million to $248 million as compared to $185 million last year while Google’s revenues rose to $3090 million this year in the second quarter as compared to $2172 million last year in the same quarter. Other Bet’s operating losses is recorded at $772 million as compared to last year’s, $855 million. The operating income has grown by $813 million to $7803 million as compared to $6990 million. Google’s advertising revenues have grown to $22,672 million as compared to $19,143 million in the same period last year.
"YouTube is one of those products scaling really well globally, just like search did, we're seeing real strong growth on mobile. I think there's a lot more growth ahead," said Google CEO Sundar Pichai during Alphabet's earnings call with investors.