(Reuters) — Google parent Alphabet Inc on Monday reported that its profit margin rose in the second quarter, delivering investors a long-awaited sign that expenses are coming into check.
Shares jumped more than 5 percent after hours.
Growth in the company’s traffic acquisition costs, a key expense, decreased for the first time in three years compared with the year-ago period. Operating margin rose to 24 percent excluding a $5 billion antitrust fine, up from 22.5 percent last quarter.
Adjusted earnings per share were $10.58, which beat the $9.52 average estimate in research aggregated by Thomson Reuters. Some analysts excluded other items as well, and Alphabet also beat that consensus of $9.59.
Alphabet said earnings per share were $11.75 before adjustments, which removes $1.1 billion in investment income from a new accounting standard for unrealized gains as well as the fine issued last week by the European Commission. Google is appealing the ruling, which found it abused its dominance in mobile software.
Alphabet’s $32.66 billion in second-quarter revenue, 86 percent of which came from Google’s advertising business, beat an average estimate of $32.17 billion.
Google’s dominance in online advertising has been challenged this year by the antitrust battle over its Android mobile software and other regulatory actions.
But the issues have yet to halt Google, which has grown quarterly revenue at least 20 percent year-over-year for two straight years.
A new privacy law enacted by the EU in May led the company to revise user privacy disclosures and clamp down on how it shares data with…