Alphabet sales growth tops forecasts
Google’s digital advertising business generated robust growth in the first quarter, while spending surged.
Parent Alphabet Inc. reported first-quarter sales of US$24.9 billion, excluding payments to partners that distribute Google services and ads. Analysts expected US$24.3 billion, according to data compiled by Bloomberg. Alphabet shares rose less than one per cent in after-hours trading.
The results suggest Google has so far shrugged off a privacy backlash against internet companies and their data-heavy ad targeting businesses. Google is the world’s largest digital ad provider. It is supported by online services that are so useful that consumers have so far continued to share their data and accept targeted ads amid increased concern about privacy and the threat of new regulation that may hurt this business.
Alphabet disclosed more details on its huge investments in private companies like Uber for the first time. The Mountain View, Calif.based firm reported a US$3 billion gain on equity securities in the first quarter. That boosted earnings by US$3.40 a share.
Alphabet capital spending surged nearly threefold to US$7.7 billion. That reflected a large realestate investment and investments in Google’s cloud-computing and hardware businesses.
“The strong economy has companies spending more on advertising and we have an ongoing migration from traditional types of media advertising to greater online and social media-based advertising,” analyst Ivan Feinseth from Tigress Financial Partners told Reuters. “Google continues to dominate both mobile and desktop search,” he added.
Worldwide sales increased to US$31.1 billion, above the average analysts’ estimate of US$30.3 billion, according to Thomson Reuters I/B/E/S. Still, operating income margins dropped to 22 per cent from 27 per cent a year ago.
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, and despite spending cuts on an unprofitable set of ancillary initiatives known as “other bets.”
Overall, quarterly profit of US$9.4 billion, or US$13.33 per share, exceeded estimates of US$6.56 billion, or US$9.28 per share, according to Thomson Reuters I/B/E/S.
Revenue from ads sold by Google rose as advertisers pursued slots on its search engine, YouTube video service and millions of partner apps and websites.