Google posts $31.1B in total revenue, beats top- and bottom-line expectations

Joanna Estrada
April 24, 2018

Revenue rose 26 per cent to US$31b from US$25b a year ago, beating analyst estimates.

Many industry observers will be keenly tracking whether brand safety and consumer privacy controversies can dent the revenue momentum of companies like Google and Facebook.

Meanwhile Google's "Other" revenues section is up more than a billion. Google's advertising business is more than twice the size of Facebook's, and the company's portfolio of data about its users is as expansive - if not more so - than that of the social network.

Also among the company's expenditures in the quarter: $2.4 billion to buy the Chelsea Market building in Manhattan, where the company had set up some of its NY offices.

Raising "other bets" Revenues from its "other bets", which include the self-driving vehicle unit Waymo and life sciences firm Verily, amounted to $150 million from $132 million.

Alphabet earnings are up in after-hours trading. Revenue from non-advertising businesses, such as Google's cloud unit and its fledgling hardware group, will also be under the spotlight.

Another brake on earnings: Google payouts to distribution partners, known as Traffic Acquisition Costs, or TAC, which jumped 36 percent to $6.3 billion. Impressions were flat year-over-year, and only up 5% sequentially. It now will report impressions and cost-per-impression.

Internet advertising continues to be the company's cash cow, with its YouTube property and mobile search doing heavy lifting. Aggregate paid clicks were up 59 percent year over year and 8 percent sequentially. The business had revenue of $31.15 billion for the quarter, compared to analyst estimates of $30.28 billion. The higher spending shaved operating profit margins to 22 percent from 27 percent a year earlier.

Under the new accounting rules, that meant Google had to mark up its stake in Uber, likely by a considerable amount, and report the unrealized gain as income. Alphabet now records estimates of the current value of its startup investments rather than waiting to report income once it has opportunity to sell those shares. The new law, which goes into effect on May 25, will restrict how companies like Google can collect, store and use personal data from users across Europe.

Google owner Alphabet Inc (NASDAQ:GOOG) beat Wall Street expectations with first-quarter revenue and earnings, but fears over rising costs muted the market's reaction.

"Recent negative headlines will not structurally change the online advertising model", John Blackledge, an analyst with Cowen & Co., said in a recent note to clients.

Google is due to hold its annual developer conference, I/O, in May, where the firm is expected to reveal the next version of its Android mobile operating system, the most widely used OS globally, and could also announce new features for its Home smart speakers line.

Here's a glimpse of Alphabet's more spendthrift ways: The company's first-quarter capital expenditures - or the spending for major projects such as real estate properties and computers - almost tripled in one year to $7.3 billion.

Other reports by Click Lancashire

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