Alphabet Inc. Sees Profit Soar 29% on Ad Sales
Alphabet Inc., the parent company for Google, posted an increase in revenue and profit Thursday as the core advertising part of its business continued growing at a rapid pace and problems like a YouTube advertiser boycott created little to no impact.
The profit by Alphabet beat estimates on Wall Street and rose by 29% to end at $5.43 billion. The performance for the quarter was called exceptional by analysts for such a large company.
One analyst said that for a company the size of Google to post growth it did, is testament to the usefulness and quality of its products.
Shares at Alphabet increased 2.8% after the closing bell Thursday.
Like its biggest rival Facebook, Google has shifted focus aggressively of its business to focus on mobile advertising.
The two behemoths represented 99% of the growth in the industry for digital advertising during 2016. Some advertisers have complained that between the two companies there is a duopoly.
It is estimated that Google will hold 61.5% of the search ad market globally for 2017, which would be up from its 60.5% during 2016, according to eMarketer a research firm.
Mobile ads are lower prices than are desktop ads, but the increasing volume more than makes up for the lower prices.
During his call with Wall Street analysts, CEO of Alphabet Sundar Pichai said that the company’s excellent properties such as Search, Maps, Google Play and YouTube are made for today’s mobile world, where people are actively interested and engaged.
Revenue at Google increased by 22.2% to end the quarter to $24.75 billion compared to $20.25 billion for the same quarter one year ago.
Paid clicks are where advertisers only pay when a user clicks their ads, increased by 44%. Analysts were expecting that increase to be 29.6%.
Net income increased ending the quarter to $5.43 billion equal to $7.73 a share compared to $4.22 billion equal to $6.01 a share for the same period one year ago.
Analysts were expecting profit for the first quarter of just over $7.34 a share.
Alphabet CFO Ruth Porat during her earnings call said that revenues at YouTube continue growing at a substantial clip, which dispelled concerns over the possible impact from a boycott by advertisers of its video service.
Google revenue from its non-advertising units, which are mainly cloud computing, its Pixel smartphone and its Play store expanded dramatically surging by 49.3% to just over $3.1 billion.