Alphabet profit misses expectations as cost per clicks fall

The Alphabet Inc. campus, also known as Googleplex, is shown in this aerial photo in Mountain View, California April 6, 2016.

Reuters/Noah Berger

Google’s parent Alphabet Inc (GOOGL.O) reported a first-quarter adjusted profit that was lower than analysts’ estimates, as cost per clicks fell.

Shares of the company dropped more than 5 percent in after market trading on Thursday.

Cost-per-click, or the average price of online ads, fell 9 percent in the quarter ended March 31.

Google’s advertising revenue increased 16.2 percent to $18.02 billion, while the number of ads, or paid clicks, rose 29 percent, the company said.

With paid clicks, advertisers pay Google only if a user clicks on an ad.

The company’s Other Bets business generated revenue of $166 million, and an operating loss of $802 million.

The Other Bets includes its broadband business Google Fiber, home automation products Nest, self-driving cars and X, the company’s research facility that works on “moon shot” ventures.

Alphabet, the world’s No.2 publicly traded company by market capitalization, said consolidated revenue rose to $20.26 billion from $17.26 billion.

Net income rose to $4.21 billion, or $6.02 per Class A and B share and Class C capital stock, from $3.52 billion, or $5.10 per share.

Excluding one-time items, it earned $7.50 per share.

Analysts on average were expecting a profit of $7.97 per share, according to Thomson Reuters I/B/E/S.

(Reporting by Narottam Medhora in Bengaluru; Editing by Savio D’Souza)