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Google share price up after strong second quarter

Google posted revenues of $17.7bn, up 11% compared with the same period in 2014, while profits were up 17% to $3.93bn

Google’s shares rose more than 10% in after-hours trade after the company announced better-than-expected second quarter (Q2) financial results.

The company posted revenues of $17.7bn, up 11% compared with the same period in 2014, while profits were up 17% to $3.93bn.

Advertising revenue was also up 11% compared with the same period in 2014 and up 3% compared with the previous quarter to $16bn.

Even though the average price of online ads fell in the quarter, Google was able to grow revenue on volume, which was up 18% on the second quarter of 2014.

“We continue to close the gap between mobile and desktop search monetisation,” said Ruth Porat, chief financial officer at Google, during her first earnings call at the company.

She attributed the success in part to Google’s efforts to improve user experiences on mobile devices and finding ways to merge online activities with real-world commerce.

Commentators have noted that Google’s ad revenue has been under pressure as users switch to mobile devices, which typically have lower advertising rates.

“Our strong Q2 results reflect continued growth across the breadth of our products, most notably core search, where mobile stood out, as well as YouTube and programmatic advertising,” said Porat.

“We are focused on developing big opportunities across a wide range of businesses. We will do so with great care regarding resource allocation,” she said.

The Guardian reported that analysts believe Porat’s assurance around resource allocation was another catalyst for driving Google’s share price up in after-hours trade.

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In response to questions about the European Commission’s (EC) accusations that Google is manipulating search results to favour its own services, Porat said it would work with the EC to address any concerns.

Google expects to boost its earnings in the future by attaching “buy buttons” to mobile ads to make shopping easier for smartphone users.

“We see ‘purchases on Google’ as a big step towards helping retailers drive more mobile conversions and win more customers,” Google shopping product management vice-president Jonathan Alferness wrote in a blog post.

He highlighted a finding by Deloitte that mobile devices used before or during shopping trips influenced just under one trillion dollars – or 28% – of in-store sales in the US in 2014.

“We’re improving the mobile experience on Google to aid shoppers as they browse, compare and research products,” said Alferness. “For retailers, opting in to ‘purchases on Google’ means improved mobile conversions thanks to a simplified checkout process.”

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