NEW YORK--Google parent Alphabet Inc posted a surge in profit and revenue on Thursday as its core advertising business continued to grow at an extraordinary rate and problems such as an advertiser boycott of YouTube had little impact.
Alphabet's profit beat Wall Street estimates and rose 29 percent to $5.43 billion, a performance that analysts called exceptional for a company so large.
"For a company of Google’s size to post the growth that it has is just a testament to the quality and usefulness of the products they make," said Colin Gillis, an analyst with BGC Partners. “They are the dominant force in digital advertising."
Shares of the company rose 2.8 percent to $916.80 after the bell on Thursday.
Like its arch-rival Facebook Inc, Google has aggressively shifted the focus of its business to mobile advertising. The two companies accounted for 99 percent of the industry growth in digital advertising in 2016, Pivotal Research said in a report this week, demonstrating market power that some advertisers complain amounts to a duopoly.
"It underscores a macro theme we are seeing in the internet space, which is that the bigger players are getting bigger and the smaller players are treading water or shrinking," said analyst James Wang of ARK Investment Management.
Google is expected to command a 61.6 percent share of the search ad market worldwide in 2017, up from 60.6 percent in 2016, according to research firm eMarketer. Mobile ads command lower prices than desktop ads, but growing volume is more than making up the difference, Wang said.
"Our great properties -- like Search, Maps, YouTube and Google Play -- are the 'prime time' for the mobile world, where people are actively engaged and interested," Google Chief Executive Officer Sundar Pichai said during a call with analysts.
Google's revenue rose 22.2 percent to $24.75 billion from $20.26 billion in the quarter ended March 31. Paid clicks, where an advertiser pays only if a user clicks on ads, rose 44 percent. Analysts on average had expected a rise of 29.7 percent, according to FactSet StreetAccount.
Net income rose to $5.43 billion, or $7.73 per share, from $4.21 billion, or $6.02 per share, a year earlier. Analysts on an average had expected a first-quarter profit of $7.34 per share, according to Thomson Reuters I/B/E/S.
