Alphabet’s Q1 net zooms 73% to $9.4 bn; revenues up 26% at $31.15 bn
24 Apr 2018
Google owner Alphabet Inc reported first-quarter net profit of $9.4 billion, or about $13.33 per share against a net profit of $5.43 in the same quarter of the previous year – a 73 per cent jump year-on-year.
Revenues for the January-March 2018 quarter rose 26 per cent year-on-year to $31.146 billion, against revenues of $24.750 billion in the first quarter of the previous year.About $3.40 of the earnings per share were attributable to a new accounting method for unrealised gains in Alphabet's investments in startups such as Uber Technologies Inc.
Excluding the investment-related gains and other items, adjusted earnings were $9.93 per share, topping the $9.28 per share consensus.
"Our ongoing strong revenue growth reflects our momentum globally, up 26 per cent versus the first quarter of 2017 and 23 per cent on a constant currency basis to $31.1 billion. We have a clear set of exciting opportunities ahead, and our strong growth enables us to invest in them with confidence," said Ruth Porat, CFO of Alphabet and Google.
Alphabet Inc achieved better pricing on ads and saw unrealised income from startup investments, sending its shares up about 1 per cent after-hours.
Alphabet's profit margins have fallen in recent quarters as it ramps up costly new projects in cloud computing and hardware at its core Google unit.
Google’s ad revenue rose with an increase in the number of ads and higher price for clicks and views of ads sold by Google on its search engine, YouTube video service and across millions of partner apps and websites.
Alphabet has been under pressure as higher costs and regulatory concerns dampened investor enthusiasm as officials across the world sought changes in Google's business practices.
Worldwide ad sales increased to $31.1 billion, above the average analysts' estimate of $30.3 billion.
Advertisers may, however, limit ad-buying this year as they start complying with the new European policy, known as General Data Protection Regulation.
Still, this pullback may be temporary as more and more advertisers shift to internet ads because of the effectiveness compared with declining media such as print and broadcast.
Revenue from Google's mobile app store and growth priorities such as cloud computing services and consumer devices was $4.4 billion in the first quarter.
But Google saw its operating margin fall compared with a year ago as it acquired 2,000 employees in Taiwan for $1.1 billion from HTC Corp.
Google also saw cost increases from moving up when it awards equity to employees and acquiring streaming rights for its YouTube TV offering.