Google On A Roll Profits Up 73%
Google is on a roll and hardware is contributing to their success along with improved advertising revenues.
Earlier today parent Company Alphabet reported that net profit surged 73% to US$9.4 billion in the first quarter, up from $5.4 billion in the same period last year.
APAC revenues were $4.8Billion.
Unlike past results ride-hailing giant Uber is now a contributor to Alphabet revenue due to an increase in the ride Companies share value.
The latest results reveal that payments to advertising partners, jumped 24% to $24.9 billion and surpassed estimates. Sales of hardware, including their new mesh network wireless offering along with voice activated speakers has also delivered improved results.
Google is expected to control 31% of the global ad market this year, down slightly from 31.7%, according to estimates from eMarketer. It’s also tipped that a new Pixel smartphone that is now getting input from former HTC smartphone engineers is set to contribute to hardware sales going forward along with new voice activated speakers.
According to the WSJ, the earnings boost helped offset the rising costs Alphabet pays partners such as Apple to direct more smartphone users to Google’s search engine. These costs have raised concerns that the company must give up chunks of its revenue to maintain its level of growth.
“The advertising business that is not based on their home page search activity is growing faster, which helps their top line, but is lower margin,” said Brian Wieser, an analyst at Pivotal Research.
Traffic costs reached $6.3 billion, up 35% from a year earlier and have made up one-fifth of the company’s revenue for five consecutive quarters. On a call with analysts in February, finance chief Ruth Porat blamed the rise in these costs on mobile search and so-called programmatic ads, where Google places ads on partners’ content—which carry higher fees. She said some of these costs would ease after the first quarter.
Asked about the impact of the European regulations on Google, on a call with analysts, Chief Executive Sundar Pichai said Google has spent more than a year preparing to be compliant. Because Google derives most of its revenue from search ads, which rely less on personal targeting, much of its business won’t be affected by the changes, he said.
The fair value of Uber shares has long been something of a mystery. Last December, Uber backers and employee sold shares to a group of investors led by SoftBank Group Corp. at a $48 billion valuation—a roughly 30% discount to the last time it sold new shares to investors, at a $68 billion valuation.