Question

(Unique, No Handwriting)

Explain why Alphabet Inc. Company is considered to have outperformed its expectations in the second quarter of 2018. (No more than 250 words.)

Answer 1

Expenses from its Google search business grew more slowly in the second quarter while revenue rose more steeply. Alphabet's second-quarter revenue rose to $32.7 billion (up 26% year over year). On a constant currency basis, Alphabet's revenue was up 23% year over year on top of the same constant-currency revenue growth rate in the year-ago quarter.

86 percent of second quarter revenue came from Google’s advertising business. The rest of the revenue came from Google’s non-advertising businesses, which include selling apps, gadgets and cloud computing services, and ventures such as offering internet service.

The quarterly growth rate of what the company pays ad partners, called "traffic acquisition costs", fell for the first time in three years.

Profitability was arguably the star of Alphabet's second quarter. The company's earnings per share, when adjusted to exclude the impact of the European Commission fine, jumped 32%. The second-quarter adjusted earnings per share of $11.75

Alphabet's Google "other" revenue, which includes revenue primarily from cloud services, the Android app store, and hardware, didn't disappoint. Not only was the segment's 37% year-over-year increase in revenue impressive in its own right, but it represented an acceleration from the 36% growth in Q1.