Google’s parent company Alphabet released its first quarter earnings for 2017 and I take a look at how it’s performing.
Ruth Porat, CFO of Alphabet said
“Our excellent results represent a terrific start to 2017, with revenues up 22% versus the first quarter of 2016 and 24% on a constant currency basis. We clearly continue to benefit from our ongoing investments in product innovation and have great momentum in our new businesses across Alphabet”
This positive outlook represents the direction the company is taking and that clearly is up!
Since the formation of Alphabet to become an umbrella under which subsidiaries such as Google and Nest exists, it has continued to grow and increase revenue and earnings with focused spend and cost management being applied to the individual businesses.
Google which generates the majority of Alphabets earnings via advertising came in at $24.75billion, which represents a 22% increase in comparison to the same period last year. This boost in revenue was also reflected in Net profit, which stood at $5.42billion which translates to a 29% jump over last year. These jumps in numbers all came about in the midst of the Youtube advert placements saga where many well-known organisations have suspended their adverts from being displayed, due to them appearing next to offensive and disturbing content. Google continues to review its algorithms around this to improve their placement of ads but it hasn’t hampered the income it receives via these advertising channels. Google’s focus on mobile ads has also aided Alphabet, as traffic has now moved from desktop to mobile devices hence being more optimised and targeted at that specific growing sector.
Outside of advertising, there were also increases in revenue of the “Other revenues” which includes hardware such as the google Pixel smartphone and Google home along with Nest and Google Fibre. This sets up Alphabet to forge ahead with the production of more hardware diversifying its product range and services.
The “Other Bets” revenue also increased but its overall profit came out as a loss of $855million, this is largely expected as this includes largely R&D for opportunities that have yet to be established as a business stream to Alphabet.
Overall Alphabets shares increased by 3% in the hours after its results announcement. This shows the strength Alphabet has to take on loss-making subsidiaries and issues related to its core advertising business and still drive its numbers up and continue to prosper. Its closest competition is Facebook in terms of advertising revenue with both combined accounting for more that 90% of revenue from advertising.
Tech Off Melon!