Wednesday 17 January 2018

Google earnings crush targets to drive Alphabet profits higher

Google Inc. Chief Executive Officer Sundar Pichai Picture: Udit Kulshrestha
Google Inc. Chief Executive Officer Sundar Pichai Picture: Udit Kulshrestha

Jillian Ambrose

Google parent Alphabet surprised Silicon Valley with better than expected results for the last quarter, as advertiser spending on mobile ads catches up with users shift away from desktop computers to smartphones.

Google revenue grew by 21pc compared to the same quarter last year, reaching $18.3bn (€16.8bn) net revenue compared to analyst expectations of $18bn.

Advertising revenue made up almost 90pc of the search giant’s income, and rose 18.1pc to $19.82bn in the third quarter. Meanwhile Google's ‘other revenue’, which includes the company's increasingly important cloud business, jumped 38.8pc.

Even though Google’s cost-per-click, or the average amount advertisers pay Google, fell 11pc in the latest period after dropping 7pc in the second quarter revenues were buoyed by an increase in paid clicks, which an advertiser pays for only if a user clicks on them. Paid clicks rose 33pc, compared with a rise of 29pc in the second quarter.

Research firm eMarketer has estimated that Google will capture $52.88bn in search ad revenue in 2016, or 56.9pc of the global market.

Google's Other Revenue, which includes the company's increasingly important cloud business, jumped 38.8pc after rising 33pc in the second quarter. Alphabet's Other Bets generated revenue of $197m, but reported an operating loss of $865m. In the year earlier period, revenue was $141m and the loss was $980m.

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.

Up to Thursday's close of $817.35, Alphabet's shares had risen 5.1pc since the start of the year.

Telegraph.co.uk

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