Business in Tech

Alphabet’s Profit Was Up 29 Percent Year on Year On Strong Google Ads Sales, Other bets Not So Much

Alphabet (Google’s parent company) released its own earnings report this week as have other tech companies too and it beat expectations. In line with forecasts, profit was up 29 percent year on year on strong ad sales.  

Google revenue (mainly from ads on YouTube, Search and display) stood at $24.75b which represents a 22 percent increase from the same period last year. Google net profit was $5.42b which is a 29 percent from the first quarter of 2016 and as at yesterday, Alphabet shares were up about 3 percent on the earnings report.

Speaking on the report, Alphabet Chief Financial Officer (CFO) Ruth Porat, 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,”

But with respect to what Alphabet calls “other bets” (businesses other than Google like Waymo, internet beaming balloons etc) the CFO says “We clearly continue to benefit from our ongoing investments in product innovation and have great momentum in our new businesses across Alphabet.” Revenue from this group of businesses stood at $244 million which is a 48 percent increase from the first quarter of 2016.

Alphabet reported a loss of $855m on businesses that are still at the research level which means investment continues to be poured into them until the day they can either stand or be canceled.

This report comes on the heels of the Interactive Advertising Bureau annual report which showed that Google and Facebook had a 49 percent and 40 percent share of the digital ads market in the United States in 2016 and while that may be so, Facebook is poised to cut into Google’s global lead in 2017. The report doesn’t seem to have much good news for the likes of Twitter and Yahoo.