Alphabet (Google) grows more than expected and eliminates doubts about advertiser leaks

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We are in the time of presenting fiscal results for the first quarter of 2017. Now Alphabet has also presented its fiscal results, in that Google is responsible for the vast majority of its revenues after the company grouped their projects to manage them more efficiently. Let’s see these results in more detail.

Fiscal results for Alphabet (Google) in the first quarter of 2017

Analysts initially expected Alphabet to have earnings $7.40 per share compared to $7.50 last year. Reported earnings are $7.73 per share that far exceeded investor’s expectations and amounted to $5.430 billion.

In terms of income, Alphabet was expected to make $24.2 billion. Reported revenues are $24.750 billion, representing a total growth of 22% over the same period last year. This growth has been fueled by a rise in revenue on mobile ads and on YouTube.

Alphabet has a growing trend of over 20% in the last three quarters, which is uncommon for a company that has been in the market for so many years. However, this quarter could have been a bit different as at the end of March many brands withdrew their investments in advertising after some media claimed that Google was placing ads alongside offensive content. Among those brands were Coca-Cola and Walmart.

Google did not comment on how much this affected their accounts but what it did was give more control on platforms like YouTube to the brands for where they could and could not place their ads. Finally all this amounted for nothing as Alphabet continues to grow unstoppable as it has for so many years now.

Cost per click repeats pattern: decreases as clicks increase

The cost per click has not stopped growing since the introduction of smartphones, as there are more users, more searches, and hence more clicks on the ads. The problem is that advertisers spend less money on mobile ads which decreased the amount of money Google makes on per click. The cost per click dropped 19% compared to the same period in 2016. As we have seen, the cost per click continues to fall as the number of clicks increases. In particular, the clicks have grown 44% when compared to the first quarter of 2016.

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99% of Alphabet’s revenue came from Google while the “Other Bets” section generated a total loss of $855 million that included subsections such as the self-contained car or home thermostats. This segment posted $244 million up from $165 million in the first quarter of 2016. However as we saw the losses were also higher.

These results have caused a sudden rise in the afterhours of writing the news. This rise at the moment is of 4% that assumes the value of per share has shot up from the $891 per share at the closing of the bag to $930 per share, this being its historical maximum in the stock market.


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