Alphabet reported a big drop in quarterly profit.

By Reuters
Updated: July 24, 2017 4:32 PM ET

Alphabet reported a 27.7% drop in quarterly profit as the company recorded a previously announced charge related to a record $2.7 billion fine imposed on its Google unit by the EU.

EU antitrust regulators last month hit Google with a record 2.4-billion-euro ($2.7 billion) fine for favoring its own shopping service, taking a tough line in the first of three probes of its dominance in searches and smartphone operating systems.

The company’s shares goog , which closed marginally up in regular trading on Monday, fell nearly 3% to $969 after the bell.

The shares had gained nearly 26% this year through Monday’s close.

On a consolidated basis, revenue rose about 21% to $26.01 billion in second quarter ended June 30, beating the analysts’ average estimate of $25.65 billion, according to Thomson Reuters I/B/E/S.

Revenue was boosted by robust demand for advertising on mobile and the company’s popular video service YouTube.

Google’s ad revenue, which accounts for a lion’s share of its business, rose 18.4% to $22.67 billion.

The company faces intensifying competition from social media giant Facebook Inc for advertising dollars. The companies together dominate the online ad market.

This year, Google is expected to generate about $73.75 billion in net digital ad revenue worldwide, a 17.8% jump from a year earlier, according to research firm eMarketer.

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Paid clicks, where an advertiser pays only if a user clicks on ads, rose 52%. Analysts on average had expected a rise of 35.2%, according to data and analytics firm FactSet.

Paid clicks rose 44% in the first quarter.

Revenue from its Google Other unit, which includes Pixel smartphone, Play Store and cloud business, rose 42.3% to $3.09 billion.

The company’s net income fell to $3.52 billion, or $5.01 per Class A and B share and Class C capital stock, in the second quarter from $4.88 billion, or $7 per share, a year earlier.

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Analysts had expected earnings of $4.49 per share.

The company changed the method it reports earnings in the first quarter, focusing on Generally Accepted Accounting Principles (GAAP) earnings instead of non-GAAP results.

 

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