Alphabet, Google’s parent company, beat analysts’ estimates for third-quarter earnings. The tech giant reported a net income of $5.06 billion, or $7.25 per share (statement).
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Up to Thursday’s close of $US817.35 ($A1,076.61), Alphabet’s shares had risen 5.1 per cent since the start of the year.
Last year, Google announced its plans to create a new public holding company, Alphabet, and a new operating structure.
Alphabet’s Google, with 90% market share, dominates the mobile search engine market. Total traffic acquisition costs rose to $4.18 billion and were flat year over year as a percentage total ad revenues (21%).
Advertising revenue, the company’s lifeblood, rose 18.1 percent to $19.82 billion in the third quarter.
Alphabet Inc., the parent company of Google, said Thursday its third-quarter revenue grew 20 percent to almost $22.5 billion, as more people used Google search to look for items on their smartphones and watch ads on YouTube.
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GOOGL expectations are for a top-line deceleration due to tough comps against last year’s addition of a third mobile ad unit, with the possibility for better cost controls around “Other Bets” initiatives acting as an offset. While Facebook has proved a worthy competitor in the mobile space, it’s Google that continues to lead. According to Per Merkle data, in 3QFY16, Google’s paid search ad growth decelerated by two bps to 20% in the USA and around six bps to 13% in the UK. “Smaller bets in areas that might seem very speculative or even unusual when compared to Google’s current businesses”.
Gains in Google’s core ads business continued to offset spending on what the company calls Other Bets – riskier long-term projects like the Fiber internet service and autonomous vehicles.
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. In the near term, the company is situated on comfortable ground, with ample cash reserves and a revenue generating machine that shows no signs of slowing. “Importantly, we expect profitability will continue to improve despite increased investments in fulfillment, content, and AWS”, Drbul concludes.
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Meanwhile Amazon also reported positive numbers in its own results – with sales for the e-commerce giant up 29% on the same period previous year to 32.7 billion USA dollars (£26.8 billion).
