Due to a hefty EU fine worth $2.7 billion last month imposed on Google-parent company Alphabet Inc., shares of the company were down by almost 3% during Monday’s after-hours trading despite an earnings beat posted on its second quarter earnings report. Alphabet shares were up by more than 1% before the release of the earnings report.
Last month, the company was given an antitrust fine from the European Commission due to claims that it favors its own shopping advertisements over others. The fine sent the company’s net income down by 28%. From having previously earned $4.9 billion during the same quarter last year, Google’s net income for the quarter that ended last June 30 is not at around $3.5 billion.
The $2.74 billion fine from the European Commission resulted from a seven-year investigation due to claims that Google have abused its own search engine platform for its own businesses. Not including the fines, the company’s earnings would have ranged at around $8.90 per share for the second quarter compared to last year’s $7. However, Google still beat most analyst estimates posting an earnings of $5.01 per share versus most estimates of $4.49.
The company who also owns YouTube posted a sales of $26 billion. Last month, the company announced that the site’s users have hit 1.5 million on a monthly basis.
For its quarterly revenue, Alphabet Inc reported a rise of 21% at $26.01 billion from $21.5 billion during the same quarter last year. Its revenue was primarily boosted by the 18% rise on its advertising revenues which comprises most of the company’s overall revenue.
Google’s revenue from its Pixel devices, Play Store, and its cloud business have jumped by 42.3% during the quarter to $3.09 billion.
Its earnings also beat most analyst expectations of $4.49 after it reported an EPS of $5.01 for the second quarter. While Google’s net income fell by 28%, the company posted a 52% rise in their paid clicks year-on-year after advertisers paid only for those ads clicked on by the users.
According to Google chief financial officer Ruth Porat, the company is getting bigger which is why both investors and analysts should expect that the company’s expenses in traffic acquisitions will rise further. Porat, however, assured that the company would invest more into high-growth products that offers shareholders more value.
The company is forecasted to deliver $73.75 billion in net digital advertising revenue this year.