Google Beats Earnings Expectations

Sundar Pichai Getty H 2016
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The numbers suggest strong performance in core areas of Google's business.

Don't get distracted by all the bells and whistles in Google's portfolio of forward-looking companies. Beneath the extra gadgetry, the core advertising business is running full speed ahead.

The Mountain View, Calif.-based tech company reported healthy second-quarter earnings after on Thursday's market close, pulling in $21.5 billion in revenue and adjusted earnings of $8.42 a share. That's compared to a consensus estimate of a $20.76-billion top line and $8.04 a share, more than enough to beat expectations.

The numbers suggest strong performance in core areas of mobile search, programmatic advertising and YouTube engagement. Google now commands more than 70 percent of search ad revenues worldwide, according to analyst Mark Mahaney at RBC Capital Markets.

Meanwhile, Google's stable of moon-shot subsidiaries, which it refers to as "Other Bets," continue to be a drag on profits.

This eclectic mix of companies includes the internet-of-things enterprise Nest, its fiber-optic pipe company Fiber and its military robotics arm Boston Dynamics, which Google tried to offload earlier this year.

One recent acquisition by Google's parent company Alphabet that makes a lot of sense is Anvato, a video platform for the entertainment industry that will allow Google to compete more directly with arch-rival Facebook. Facebook reported stellar earnings on Wednesday, in large part due to its push into video.

Purchased earlier this month, Anvato offers services for streaming video, VOD and ad insertion. Its customers include major media players Fox Sports, NBCU, Scripps and Univision.

Google shares are up more than 8 percent on the quarter to $762 from $705. Goldman Sachs analyst Heather Bellini expects the share price to hit $810 by this time next year.