Alphabet quarterly profit climbs on ad revenue surge and other bets

I've been really proud of progress this quarter; launching popular new products and to grow our business in new areas: Sundar Pichai

Google's parent company Alphabet has reported profit in the recently-ended quarter leapt as money poured in from ads delivered to mobile devices and returns improved on "other bets."

Alphabet profit was up 32.4 per cent to $6.7 billion on in the quarter on revenue that increased 24 per cent to $27.8 billion, up 24 per cent from the same period a year earlier.

Chief financial officer Ruth Porat credited "strength across Google and Other Bets."

The earnings topped market expectations, and Alphabet shares jumped in after-market trade on the Nasdaq exchange before concerns about growing expenses apparently caused them to settle back a bit to be up nearly 3 per cent to USD 1,021.

"It is what everybody looks at every time: what is going on with expenses?" independent analyst Rob Enderle told AFP.

"For the most part they seem to be well managed, but you watch to make sure they remember they still have limits even though they are printing money."

While mobile ads were a main area of growth, they brought with them higher traffic acquisition costs, pushing up Google expenses in a trend seen as unavoidable.

Investing in cloud services and artificial intelligence also means spending more on data centers to provide the massive computing power involved.

"I've been really proud of the progress this quarter; launching popular new products and continuing to grow our business in new areas," Google chief executive Sundar Pichai said in an earnings call with analysts.

"It's been particularly exciting to see our early bet on artificial intelligence pay off and go from a research project to something that can solve new problems for 1 billion people a day."

YouTube continued to see "phenomenal growth" with more than 1.5 billion people spending an average of an hour a day watching videos there on mobile devices, and surging use on television screens in homes, according to Pichai.

He boasted of progress winning businesses over to Google services hosted in the internet cloud, where the company competes with Amazon and Microsoft in that market.

Pichai also said that opening day pre-orders for recently unveiled Pixel 2 smartphones were double that seen for the first-generation Pixel.

Google is "seriously committed to making hardware" as well as working with partners such as South Korean consumer electronics giant Samsung which is a major producer of smartphones powered by Android software made available free by the US internet company.

"The intersection of hardware and software is how you drive computing forward," Pichai said.

"I think it's important we thoughtfully put our opinion forward."

Smartphones and other devices "made by Google" can showcase the potential of its Android and Chrome software, setting a bar for partners.