Alphabet said that it had made solid progress in mobile and video advertising and revenue and profit well above analysts’ average forecasts.
The results come at a pivotal time for the company as it navigates the transition from desktop to mobile, where ads are generally less profitable, while facing growing competition from rivals like Facebook.
Sundar Pichai, chief executive of Google said that mobile search was the reason for the strong results. “Search traffic on mobile phones have now surpassed desktop traffic worldwide,” he said.
Shares of Alphabet rose almost nine percent in after-hours trading to $741, easily a record. At that level, the company’s market value would be around $500 billion, making it the second-most valuable company after Apple.
Investors have been pressing the company to return more of its $72 billion cash pile, but the announcement that Alphabet would buy back up to $5.09 billion of its Class C shares came as a surprise.
Third quarter revenue rose 13 percent to $18.68 billion, above the $18.53 billion that Wall Street expected.
The company earned $7.35 per share, up 17.6 percent from the year before. That was ahead of analysts’ average estimate of $7.21 per share.
Expenses rose 9.1 percent to $13.97 billion but were 74.7 percent of total revenue, compared to 77.4 percent in the same quarter last year. This basically means the company has been keeping its spending down.
Alphabet said that the number of paid clicks, in which advertisers pay only if a user clicks on the ad, rose 23 percent, compared to an 18 percent increase in the previous quarter.
The Cost-per-click, or the average price of online ads, fell 11 percent in the quarter.