Alphabet reports strong Q1 on the back of booming advertising business

By : |April 28, 2017 0

Outperforming Wall Street expectations, Google’s parent company Alphabet posted the first-quarter earning reports on Thursday.

While Wall Street was expecting earnings of $7.40 per share on revenue of $24.2 billion, Alphabet posted earnings of $7.73 per share on revenue of $24.8 billion, a 22 percent jump from the same period last year. The company’s profit too rose 29 percent to $5.43 billion, a performance that analysts called exceptional for a company so large.

Ruth Porat, CFO of Alphabet, said, “Our excellent results represent a terrific start to 2017, with revenues up 22 percent versus the first quarter of 2016 and 24 percent 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.”

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The Google core business is, as usual, going really strong repeating the same story every quarter — the value of each ad (cost-per-click) goes down while the number of ad impressions goes up, and Google makes a ton of money in the process. Google’s cost-per-click fell sharply year-over-year in the first quarter, shrinking 19 percent. Its paid clicks meanwhile grew 44 percent year-over-year in the first quarter.

Google’s “other revenues” which includes cloud, Play and hardware hit $3.1 billion in revenue, up from around $2.1 billion in the same quarter a year earlier. Google has increased its focus on a portfolio of cloud and enterprise products, which compete more or less directly with Amazon’s ballooning AWS business and Microsoft’s Azure division. Last quarter, Google’s “other revenues” grew more than 60 percent year-over-year and hit $3.4 billion in quarterly revenue.

Obviously, there were losses also. Losses from “other bets,” recorded a figure of $855 million in the first quarter, up from $774 million in the same quarter a year earlier. Revenue, however, continued to climb up to $244 million this quarter compared to $165 million in the same quarter a year earlier.

In March, Google-owned YouTube went through a rocky phase, receiving flak from major brands for displaying offensive videos. However, it didn’t show any negative impact on its earning report.

Shares of Alphabet were up 3 percent in extended trading after it reported its earnings.

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