The advertising world is going mobile in a big way. So is Google, which is why the search giant today delivered second-quarter earnings that easily beat expectations on both profits and revenues.

Alphabet Inc., Google’s parent company, said it earned a profit before certain expenses such as stock compensation of $8.42 a share on a 21 percent rise in revenues (25 percent on constant currency), to $17.5 billion. Analysts had expected a profit of $8.06 a share on revenues of about $16.9 billion, up 18 percent.

As a result, investors were bidding up the shares by almost 5 percent in after-hours trading, following a half-percent rise in today’s session. That’s a departure from most quarters in the past three years, when Google has often disappointed investors.

“Mobile is the engine that drives our business,” Google Chief Executive Officer Sundar Pichai (pictured above) said in comments during the analyst conference call.

Alphabet Chief Financial Officer Ruth Porat said in the analyst call that mobile search, YouTube and automated “programmatic” display advertising drove the strength in revenues.

Google’s cloud and enterprise push also is beginning to contribute significantly to revenue growth. Google saw 33 percent growth in these “other revenues,” to $2.2 billion. That was chiefly driven by cloud and Google Apps, as well as Google Play and hardware.

Pichai said that Senior Vice President Diane Greene, in charge of cloud and enterprise efforts, has integrated sales and engineering teams so that “now our customers have one enterprise face.” He said those and other changes are “obviously having an impact on the kinds of conversations we’re having,” resulting in Google’s cloud platform getting considered in more requests for proposals.

Google’s so-called “other bets,” mainly Nest, Fiber, and Verily, while still small compared with advertising, are also growing fast, with revenues of $185 million, up from $75 million a year ago, though losses hit $709 million.

Google’s results come on the heels of even stronger results yesterday from Facebook Inc. The pair continue to dominate online advertising ahead of every other company by far. Outside of China, the two companies accounted for virtually all of the $18 billion in revenue growth last year in digital ads.

“Revenue growth trends seem pretty clear with Google reinforcing its co-hegemonic position alongside Facebook on an ongoing basis,” Pivotal Research Group LLC analyst Brian Wieser said in a note to clients today. However, he thinks Google’s long-term profit margins inevitably will decline because display and other products are not as profitable as search ads.

Indeed, Google continues to face a number of challenges, not least that the search advertising it dominates is no longer the chief driver of online ad growth. Thanks in large part to Facebook’s growth in mobile display and video ads that run in its central news feed, display advertising generally is driving digital advertising–ironically just as display’s first champion, Yahoo Inc., is being sold to Verizon on the cheap.

Google remains relatively strong in display by virtue of its AdSense ad network that syndicates ads to some 2 million websites, as well as its fast-growing YouTube unit, but it’s still second behind Facebook. Simply put, it doesn’t have the advantage in display that it always has had in search, and indeed Facebook is considered by some advertisers to be superior in its consumer targeting abilities.

While Google is hardly struggling in ads, it’s using its ad riches to cast wide for other businesses, in particular its cloud computing and enterprise computing businesses. There too, however, it’s fighting from behind Amazon Web Services, Microsoft Azure and others.

Pichai said in comments after the report that machine learning remains an overriding focus for current and future Google products, used by 100 teams at the company. “Machine learning is the engine that will drive our future,” he said.

Photo by Robert Hof