Google's Profit Takes Three Major Hits in 15 Months

Google’s parent company, Alphabet, delivered convincing second quarter results on Monday, beating analyst expectations across the board. Just days after being hit by a $5-billion antitrust fine by the European Commission, the company reported $32.7 billion in revenue for the three months ending June 30, up 26 percent from last year’s second quarter.

Alphabet’s profitability took a severe hit in the second quarter, but investors have little to worry about, because the drop in net income can be entirely traced back to the impact of the antitrust fine Google has just been hit with. After accounting for the fine, net profit for the second quarter amounted to $3.2 billion, compared to $8.3 billion when the fine is disregarded.

As the following chart illustrates, this is the third time in just 15 months that Google’s profit has taken a major hit from unexpected expenses. One year ago, in Q2 2017, Google was fined $2.7 billion by European regulators in another antitrust case and last year’s holiday quarter results were dragged down by a $9.9 billion tax expense related to the U.S. Tax Cuts and Jobs Act.