Despite the $2.74 billion fine by the European Commission, Alphabet still managed to report double-digit growth in revenue this past quarter.
Just around a month ago, the European Commission decided to fine Google a whopping €2.42 billion or approximately $2.74 billion for breaching EU antitrust rules. As expected, Alphabet’s operating income was hit by this hefty fine, but the company’s overall revenue from this past quarter actually beat market analyst expectations, accelerating its growth.
Google’s parent company has just published second quarter earnings and reported $26.01 billion in revenue. Not surprisingly, Alphabet’s advertisement-centric businesses – namely Google, Android, and YouTube – are still the driving force behind the company’s double-digit growth in revenue, accounting for about $22.7 billion of the $26.01 billion although hardware sales of the Pixel smartphones as well as Google Home certainly seem to have contributed. As Ruth Porat, CFO of Alphabet, explains, the company’s Q2 results are impressive:
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.
Due to the heavy fine from last month, however, Alphabet’s operating income is down this quarter compared to the previous quarter. Without it, it would have raked in $6.8 billion in profit, but even after the record-breaking $2.74 billion fine, the company managed to report $4.1 billion in operating income.
It’s likely that Alphabet will continue to rely on advertisements as a vital source of growth and seek to expand on its hardware efforts.
Moving forward, it’s likely that Alphabet will continue to rely on advertisements as a vital source of growth and seek to expand on its hardware efforts. Google, in particular, is indispensable in that regard, and with its CEO Sundar Pichai now on Alphabet’s board of directors, the search giant’s role and Pichai’s role, to be more specific, are bound to become even more important. Porat undoubtedly has high hopes for Google’s hardware ambitions and Pichai’s leadership – the upcoming Pixel 2 smartphones will be yet another test for Pichai and his company.