Google parent Alphabet released its second-quarter earnings for 2019. During the teleconference following the announcement of the numbers, Google CEO Sundar Pichai stated that “overall Pixel unit sales in Q2 grew more than 2x year over year”. At first glance, it seems absolutely fabulous news, especially when the numbers of first-quarter phones weren’t good. I remember that almost three months ago, Alphabet’s finance director, Ruth Porat, said that Pixel sales fell every year during the first three months of this year.
But once you realize that Google Pixel 3a and mid-range Pixel 3a XL were launched in May during the second quarter, this would certainly give you an explanation for such an increase in unit sales. Even if the average pixels had a lukewarm demand, which was not the case at all, Google would have reported an increase in Pixel sales in the same quarter of 2018 when no new Pixel phones were launched. Apparently, mid-range pixels have been a hit among consumers who wanted to buy a large smartphone camera at a cheaper price. Pixel 3a and Pixel 3a XL cost $399 and $479 respectively and several offers appeared during the 10 weeks that the phones were available. The devices are included in Google’s “Other” category and revenue in that sector increased from $4.43 billion a year to $6.18 billion this year, an increase of 40%.
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Currently, the company is preparing the Pixel 4 line, which could feature Google’s Project Soli technology. This is a radar-based system that tracks small hand movements and would allow Pixel users to control the phone through the use of subtle gestures. Google has already published a real photo showing part of the device’s back panel, although new models are not expected to be released until October.
Google generated revenues of $38.8 billion in the second quarter, up 19.3% year-on-year. Operating income increased 16% annually to $10.4 billion. The company spent $3.62 billion to acquire traffic over the three months, above the $3.47 billion paid in the second quarter of 2018. As a percentage of Google’s advertising revenue, these costs actually fell to 22% from 23% at the same time of the year. It makes good news for the company. Clicks paid on Google sites increased by 28% on an annual basis, but growth slowed to 6% compared to the first quarter of this year. CFO Porat said that YouTube has experienced strong revenue growth. “YouTube was again the second largest contributor of revenue growth, and [we’re] really pleased with the ongoing momentum that we’re seeing here,” said the executive. A decrease in Google’s overall growth rate in the last quarter was attributed to YouTube, but it appears that the video streaming site was able to change things during the three months from April to June.
With a 90% share of the online search market, Google has become an easy target for those who complain that Big Tech has grown too big. Among the legislators’ conversations on both sides of the room, companies like Google and Facebook should be divided, the US Department of Justice announced that he intends to investigate several technology companies, including Google, for possible antitrust violations.
The second-quarter earnings report seemed to encourage investors. After the close of 16:00 EDT on US markets, Alphabet (GOOG-NASDAQ) shares rose by $ 93.67 or 8.3% to $ 1,225.79.
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