Google Parent Alphabet's Ad Sales Hit Record, but Costs Pile Up--Update

By Rob Copeland

Google's online-advertising engine generated more cash than ever in the third quarter, a sign of strength for the search engine giant's flagship franchise.

The growth, however, carries new complications unheard of just a few quarters ago. Analysts and investors are encouraging the company to plow ahead on new advertising opportunities in units like video platform YouTube and the ubiquitous Google Maps app. Yet efforts to create new sources of profit across its empire could raise competition concerns with regulators.

Google's parent, Alphabet Inc. reported revenue of $40.5 billion, a rise of 20% over the same period last year. While that would be enviable growth for many other companies, the growth is modestly below Google's track record of late.

Alphabet's profit for the third quarter -- $7.1 billion -- was lower than Wall Street's expectations and down 23% from a year earlier, when it was boosted by changes to the U.S. tax code. The company's margin was also crimped as costs rose.

Alphabet stock fell 2% after hours Monday. Shares have gained roughly 25% this year, in line with the broader technology market.

Write to Rob Copeland at rob.copeland@wsj.com

(END) Dow Jones Newswires

October 28, 2019 17:09 ET (21:09 GMT)

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