Earnings

Google Glows On Mobile (And Ads, Too)

In an earnings season dominated by some tech disappointments (Amazon and Apple), Google shone (and yes, we know the parent company is Alphabet).

Alphabet showed profits up 27 percent year over year to $9.06, better than The Street at $8.63, climbing more quickly than sales, which nonetheless were also up nicely in the double digits, by 20 percent to $22.4 billion. That makes seven quarters in a row of growth in the top line by double digits.

That history comes with the broad trend of more ads posted on the eponymous search engine and with a concurrent positive trend of more users clicking through those ads. Mobile and YouTube showed strength as well, called out by CFO Ruth Porat as specific growth drivers in the quarter.

Google’s ad business showed 18 percent growth to $19.8 billion in the quarter, and paid clicks stood at 33 percent growth, accelerating beyond the 29 percent seen in this business in the second quarter. Cost per click — which shows the average amounts paid to the search and ad giant — were down 11 percent in the period. But that, of course, came on a wave of mobile growth, and it has been a strategic intent of the company to become ever entrenched in mobile.

All in, the advertising business accounted for 89 percent of Google’s top line. The cloud business is moving, well, skyward, with a boost to the 38 percent growth in the company’s other revenue line. CEO Sundar Pichai (who stated that the firm’s services are “prime time for the mobile world”) said cloud will be one of the larger areas of investment in 2017. The longer-term trends, he said, would focus on computing done “more naturally” and in a seamless manner in the cloud and with intelligent assistants.

Though not contributing to the quarter’s results, the CEO called out new products by name, of course, such as the Pixel phone and Assistant, as continued movement into new products.

The “Other Bets” unit, which has more nascent technologies in hand (such as Nest, with smart home devices, such as thermostats, and separate initiatives, such as self-driving cars) saw sales of $197 million, with an operating loss of $865 million.

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