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Alphabet shares soar past US$1,000 as third quarter numbers top estimates

Published: 07:32 27 Oct 2017 BST

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More people clicked on Google ads in the quarter than analysts had expected

Google owner. Alphabet Inc's (NASDAQ:GOOG) shares headed past the US$1,000 mark for the first time after the search engine and technology giant topped Wall Street forecasts with its third-quarter earnings.

Some analysts had worried that recent regulatory issues and companies pulling ads from YouTube might hamper performance, but a sharp rise in smartphone advertising volumes helped to ease any concerns.

READ: Google appeals against record €2.4bn antitrust fine

Sales jumped 24% year-on-year to US$27.8bn in the three months to September 30, above the consensus forecast of US$27.2bn.

Diluted earnings per share beat expectations by more than US$1, coming in at US$9.57, significantly higher than the average analyst estimate for US$8.33, and up a third from this time last year.

Revenues were boosted by a higher-than-expected number of paid clicks during the period which rose 47% compared to the year ago period, more than offsetting a 21% fall in cost-per-click – the amount companies pay Google every time their ad is clicked.

The cost of acquiring that new traffic was a little higher than analysts had expected, rising 32% year-on-year, mainly because mobile search carries higher traffic acquisition costs, Alphabet said.

READ: Google parent Alphabet posts quarterly profit decline after record EU antitrust fine

Capital expenditure in the quarter jumped to US$3.5bn from US$2.8bn a year earlier, with most of that being spent on Google data centres and content acquisition for YouTube.

"We had a terrific quarter, with revenues up 24% year-on-year, reflecting strength across Google and Other Bets," said Ruth Porat, chief financial officer of Alphabet.

"Our momentum is a result of investments over many years in fantastic people, products and partnerships."

Speaking of other bets – other divisions away from Google, such as Nest, Fiber and Verily – contributed revenue of US$302mln (Q3 2016: US$197mln). Their operating loss narrowed from US$861mln to US$812mln

In after-hours trading in New York, Alphabet shares gained 2.9% to US$1,001.

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