Google parent Alphabet Inc (GOOGL.O) reported a 20.2 per cent rise in quarterly revenue on Thursday, helped by robust sales of advertising on mobile devices and YouTube, and the search company authorized a US$7 billion repurchase of its Class C stock.
Alphabet, along with Facebook Inc, dominates the fast-growing mobile advertising market.
Shares of Alphabet, the world's No. 2 company by market value, were up 1.6 per cent in after-hours trading.
Google has been dogged by concerns about how it would nudge its vast web advertising business toward mobile, but the company's recent performance has reassured Wall Street that the transition is well underway, said analyst Kerry Rice of Needham & Co.
"They are just one of the best positioned companies for the future of the internet," Rice said.
Google's ad revenue rose 18.1 per cent to US$19.82 billion in the third quarter, accounting for 89.1 per cent of Google's total revenue, compared with 89.8 per cent of revenue in the second quarter.
Paid clicks rose 33 per cent, compared with a rise of 29 per cent in the second quarter. Paid clicks are those ads on which an advertiser pays only if a user clicks on them.
Cost-per-click, or the average amount advertisers pay Google, fell 11 per cent in the latest period after dropping 7 per cent in the second quarter.
Analysts on average had expected a decline of 7.9 per cent, according to FactSet StreetAccount.
Per-click costs have been falling as people shift to mobile devices from desktops. Because of the limited space, advertising on mobile devices is generally cheaper.
Investors are willing to forgive the falling cost-per-click for now as it suggests strong mobile growth, Rice said.
"Over the last few quarters it seems investors have worried less about that as long as paid clicks are also going up," he said.
Research firm eMarketer has estimated that Google will capture US$52.88 billion in search ad revenue in 2016, or 56.9 per cent of the global market.
Google's Other Revenue, which includes the company's increasingly important cloud business, jumped 38.8 per cent after rising 33 per cent in the second quarter.
The cloud business competes with services offered by market-leader Amazon.com Inc, Microsoft Corp and IBM Corp.
Alphabet's Other Bets generated revenue of US$197 million, but reported an operating loss of US$865 million. In the year earlier period, revenue was US$141 million and the loss was US$980 million.
Other Bets includes broadband business Google Fiber, home automation products Nest, self-driving cars as well as X, the company's research facility that works on "moon shot" ventures.
The narrowing loss suggested Chief Financial Officer Ruth Porat is instilling the kind of financial discipline investors have long hoped to see from the company, said analyst Colin Gillis of BGC Partners.
"Everybody loves Ruth," he said.
The company's consolidated revenue rose to US$22.45 billion in the three months to Sept. 30 from US$18.68 billion a year earlier.
Net income rose to US$5.06 billion, or US$7.25 per Class A and B share and Class C capital stock, from US$3.98 billion, or US$5.73 per share, a year earlier. (http://bit.ly/2eWsu9Y)
Excluding one-time items, Alphabet earned US$9.06 per share.
Analysts had expected earnings of US$8.63 per share on revenue of US$22.05 billion, according to Thomson Reuters I/B/E/S.
Up to Thursday's close of US$817.35, Alphabet's shares had risen 5.1 per cent since the start of the year.
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