Google’s parent company Alphabet beats on earnings, brings in $27.77 billion in Q3

Sundar Pichai
Google CEO Sundar

Justin Sullivan / Getty

  • Google beat expectations on Q3 results, sending the
    stock popping after hours.
  • The company generated $27.77 billion in
    revenue, up 24% from a year ago.

  • Despite controversies like fake Russian ads and
    fake news, the company continues to out

Google’s parent company Alphabet topped
Wall Street’s Q3 financial targets, as its mobile search
advertising business and YouTube video site pushed revenue up 24%
from the year before. 

Shares of Alphabet were up as much 4% in after hours trading on
Thursday, following the announcement. 

Thursday afternoon was tech earnings mania with Amazon, Alphabet,
Intel and Microsoft all reporting earnings. All of them beat
expectations across the board.

  • Amazon boosted its revenue by 34% year-over-year
    , blowing
    past Wall Street targets.
  • Intel beat
    analyst expectations in its third-quarter earnings report with
    revenues up 2% from the same quarter last year.

  • Microsoft’s
    fiscal first quarter earnings beat
    Wall Street expectation on both the top and bottom lines.
    Shares in the company, which reported its results after
    the closing bell on Thursday, inched up almost 4% to about
    $81.75 in after-hours trading.

Alphabet executives pointed to strength in its online ad business
across regions of the world during the third quarter, and
highlighted new initiatives like Google’s fledgling line up of
hardware products and Google’s cloud computing business.

“You’re clearly entering an era where you’re going
to have different types of computing experiences,”
Google CEO Sundar Pichai said during the conference call with
analysts. “So to do that and to stitch it all together
across, I think it’s important that we thoughtfully put our
opinion forward.”

A warning about a rising cost

But Google executives also warned that payments to partner
websites would continue to grow, as consumers increasingly access
Google’s services on mobile devices like smartphones.

Concerns about Google’s so-called TAC, or traffic acquisition
costs, were on display during Thursday’s conference call, as
several analysts queried Google execs about the Q3 increase (now
23% of ad revenue versus 21% in the year ago period). But CFO
Ruth Porat declined to provide more details about the increase,
other than to ascribe it to the shift to mobile and to “changing
partner agreements”

Here are the results, versus analyst expectations from Bloomberg
and Thomson Reuters:

  • Revenue: $27.77 billion vs. $27.2
    billion expected (up 24% year-over-year)
  • EPS (GAAP):  $9.57 vs. $8.34
  • Traffic acquisition costs, which Google pays
    to partners, was up for the quarter with $3.1 billion spent
    versus $2.62 billion last year.
  • Cost-per-click on Google properties
    was down 21% from the year-ago quarter.
  • Operating loss for Other Bets, which includes
    other Alphabet companies like X, Nest, and Waymo, was $812
  • Google’s Other
    , which includes
    hardware and cloud services, was $3.4 billion, up from $2.43
    billion a year ago.
  • Headcount was up to 78,101, versus 69,953 for
    the same quarter last year. 

Alphabet executives said the biggest growth in
headcount was in Google’s cloud business, as the
company bulks up on technical and sales roles.

The big story surrounding Google is the fake ads from Russian
bots that ran across various Google platforms during the 2016 US
election. Google has
discovered less than $100,000 worth of ads so far
Kent Walker, Google’s general counsel, will testify before
Congress with representatives from Facebook and Twitter regarding
Russian abuse on their platforms on November 1.

Despite the fake news problems and Russian ad abuse, Alphabet’s
stock has been performing well. It hit an all-time high of $1,016
last week, and the company was able to report a healthy earnings
beat Thursday.

Get the latest Google stock price here.

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