Alphabet jumps after big earnings beat

Google parent company Alphabet just reported its second quarter earnings and the stock popped after-hours on the results.

Here are the most important numbers:

— Earnings per share (adjusted): $11.75 vs $9.59 expected by a Thomson Reuters consensus estimate

— Revenue: $32.66 billion vs $32.17 billion expected by a Thomson Reuters consensus estimate

The stock soared more than 5 percent after-hours, and settled to about 3.5 percent up during the company’s earnings call.

The European Union just slapped the company with a massive $5 billion fine for competition abuses related to its Android phone software, which showed up as a separate operating expense line on its income statement, affecting its non-adjusted earnings per share. Including the fines, Alphabet’s EPS was $4.54.

As usual, Google’s advertising business accounted for most of its revenue, hitting $28 billion in the second quarter, up 23.9 percent year-over-year. Meanwhile, its “other revenues,” which include its cloud business and hardware sales, was $4.4 billion, or 36.5 percent year-over-year.

Alphabet also breaks out the revenues and losses for its “Other Bets,” like healthcare company Verily, internet service provider Fiber, and self-driving car company Waymo. Other Bets posted Q2 revenue of $145 million, up from $97 million the same quarter last year. Operating losses also grew, with the company posting losses of $732 million up from $633 million the year before.

Google’s traffic acquisition costs, which includes the money it pays to phone manufactures, like Apple, to use its services, like search, was $6.4 billion, or 23 percent of its advertising revenues. That’s down from 24 percent last quarter, and aligns with Alphabet CFO Ruth Porat’s advisement last quarter that the TAC as a percentage of revenue would slow beginning in Q2.

The company’s capital expenditures jumped to $5.5 billion — nearly double last year’s figure of $2.8 billion. On the company’s earnings call, Porat attributed that increase to investments in data centers and facilities, as well as production equipment. Excluding the impact of the European Union’s fine, Alphabet’s operating expenses were $10.9 billion, up 24 percent year-over-year, driven by increased investment in R&D.

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