And it’s that time of the year again. Every major tech behemoth in the Valley is currently nipping to show their might and how they plan to harness it in the future. Today, we’ll take a look at Google parent Alphabet, who reported its third quarter earning numbers. They show that the Mountain View behemoth still has an appetite for growth led by innovation(and obviously search!).
Google(the core business, and what Alphabet is popularly known as) crushed Wall Street estimates to post earnings of $9.06 per share, adjusted and a revenue of $22.45 billion. This is a 20 percent surge in revenues when compared to $18.68 billion in the same quarter last year. The tech behemoth was expected to report earning-per-share of $8.63 on revenues of $22.05 billion.
Commenting on the same, Ruth Porat, CFO of Alphabet, said,
We had a great third quarter, with 20% revenue growth year on year, and 23% on a constant currency basis. Mobile search and video are powering our core advertising business and we’re excited about the progress of newer businesses in Google and Other Bets.
In addition, the company also reported a GAAP operating income(or profit) of $5.7 billion, which rose 26 percent year-on-year. This was reported on the back of strong mobile user growth combined with an increased expenditure on mobile advertising. The profits were pulled from both search and video ads, as said by Porat above.
Though the earning numbers yet again posted an 11 percent decline for the primary ad metric cost-per-click, but the aggregate paid clicks increased 33 percent in the third quarter year-over-year. This goes to show that advertisers and businesses are willing to spend more to market their product, earlier on the web and now on mobile. The company also reported that the total number of paid click on Google websites increased 11 percent, while the cost-per-click dropped 5 percent on a year-on-year basis.
Google used to and still dominates the search advertisement market. Earlier, however, these ads were limited only to the web but have since been making their way into the rapidly growing number of smartphone devices. Due to this paradigm shift, investors have been wary of the value of advertisements on mobile not being as high as those shown on the desktop. The company is, however, now pushing new innovative ways to market products and place ads in search results. This transition to mobile is expected to soon turn around and become the main driver of ad revenue for the company.
The company is now pushing new innovative ways to market products and place ads in search results. This places it in direct competition with social media behemoth Facebook, whose advertising business is flourishing and expanding rapidly to all confines of the interwebs. Google’s transition to mobile is, however, expected to soon turn around and become the main driver of ad revenue for the company.
Google has also detailed the revenue and loss figures for its other bets — the companies which are not a part of the core business. These would include everything from smart thermostat Nest, high-speed internet service Fiber, and health care company Verily. With regard to same, the company posted revenues of $197 million and losses of 865 million as compared to $141 million and $980 million last year.
Towards the end of the earning report, Google also announced that it would buyback $7.02 billion worth of its Class C capital stock. It also says that this repurchase is expected to be executed from time to time, depending on general business, market conditions, and other investment opportunities.