Shares are off almost 3% in after hours trading.
Here are the numbers:
- EPS: $5.01 versus $4.49 expected
- Revenue: $26.01 billion, up from $21.5 billion a year ago
- Paid clicks: +52% from a year ago
- Cost per click: (23%) from a year ago
The drop in cost per click — the amount advertisers are paying each time a user clicks on an ad served by Google — dropped 23%, much higher than the 15% analysts expected, according to StreetAccount. Traffic acquisition costs amounted to $5.09 billion, higher than analyst estimates of $4.75 billion.
Still, operating income excluding the EU fine rose 15 percent from a year earlier.
Alphabet CFO Ruth Porat said on a call with reporters that the company’s capital expenditures reflected a pause in its expansion of the Google Fiber business.
Alphabet has been adding new content as it races Facebook and traditional TV networks for a share of the surging market for digital video ads.
YouTube said in June that it had reaches 1.5 billion monthly users and would add 12 new TV shows to the 37 it already has on its YouTube Red service.
The company is also updating its core search product as more consumers use its service via smartphones.
Still, its drive to innovate has run into a regulatory wall in Europe, where regulators ruled Google used its monopoly position in search advertising to hurt rivals by…