Alphabet reports boost in profits thanks to soaring mobile, video sales

“The losses from the “other bets” category” were more than offset by Google’s continued growth in ad sales and app store revenue. On a constant currency basis, revenue was up 25% year-on-year.

Alphabet shares rallied 4.7 per cent in after-hours trade on the results. More specifically, advertising revenue from Google’s own websites increased 24.2%, to $15.4 billion, while revenue from Google Network Members’ sites grew 3.4%, to $3.743 billion.

The performance drove Alphabet’s group revenue to $21.5 billion from $17.7 billion in Q2 2015. The company recently posted a net income of $8.67 per share on revenue of $21.33 billion, up 18% from the same period one year ago and that way above the analyst’s predictions, of an income per share of $8.10 on revenue of $20.8 billion.

Jefferies’ Pitz raised his price target for Alphabet to $1,000 from $925, saying the company’s second quarter beat reflects accelerating growth at Google, namely in mobile search and YouTube. Those numbers aren’t broken out individually, making it impossible to know just how well Google is doing in the cloud. Others would like to see Alphabet get more down-to-earth, and commercialize its projects more, like it did with Google Fiber. (GOOGL) on Thursday reported second-quarter earnings of $4.88 billion.

But some of those innovative opportunities are still not close to paying off.

In the second quarter, operating losses from those divisions, classified as “Other Bets” in Alphabets financials, totaled $859 million, widening from $660 million a year earlier.

Those bets include risky, expensive projects like self-driving cars and Google Fiber, which delivers high-speed Internet and accounted for much of the capital costs in this sector in the most recent quarter.

The company said half of the searches on its web browser, Chrome, now come from mobile devices.

Therefore, the company doesn’t expect everything to pay off in a big way – and isn’t bothered that they are, in Porat’s words, “pre-revenue”.

Accordingly, Google is hyperfocused on improving the mobile experience. Thursday’s results follow better-than-expected earnings and sales from Facebook Wednesday.

Porat said Alphabet is expanding its testing of self-driving cars and is more than doubling the number of vehicles in its fleet, but the company has also indicated that it will consider divestitures of underperforming units after putting robotics firm Boston Dynamics up for sale last quarter.