Alphabet (Google) Has Reported Their 3rd Quarter ResultsGOOG), (GOOGL) has reported its third quarter results and the company hit it out of the park. The company reported better than expected results leading to share skyrocketing in after hour trading. Alphabet use to be Google Inc, however, the company went through a structuring to model their business after Berkshire Hathaway (BRK.A),(BRK.B) and changed their name to Alphabet Inc.
The company bottom line was boosted by strong gains in mobile and Youtube advertising, while also keeping cost down.
Revenue and earnings came in higher, however, the company saw expenses rise 9% to $13.97 billion for the third quarter. This was down to 74.7% of revenues from 77.4 percent in the same quarter last year. Alphabet saw its percentage decline of expenses on revenue thanks to their new CFO Ruth Porat tight reign over finances.
Alphabet's New CFO Ruth Porat said in the earnings call that revenue growth reflects, ""ongoing momentum in Google with acceleration in mobile search complemented by the strength of YouTube and programmatic advertising".
The company reported that their advertising revenues increased 13% to $16.78 billion, thanks to total clicks paid increasing 23%. However, on the other hand the company saw a decline of 11% in cost per click. This will continue as the company continues to receive more of their adverting revenues from mobile not desktops.
Ms Porat discuss mobile search revenues on the earnings call saying, "Mobile search revenue was up significantly and was an important catalyst in the quarter, but it's important to note desktop remains a solid contributor,"
This was the first earnings report Alphabet since restructuring the company. Under their new structure search, advertising, maps, Youtube, and Android will remain part of Google. On the other hand Alphabet businesses will include Nest, Google Venture, and Google Capital.
The CEO Of Google Sundar Pichai during the earnings call celebrated his units successful saying that those technologies are just, "Mobile search revenue was up significantly and was an important catalyst in the quarter, but it's important to note desktop remains a solid contributor," He went on to say, "place of incredible creativity and innovation that uses our unique technical expertise to tackle big problems and create that future."
Mr. Pichai said that company future plans includes Google's cloud strategy, which he said, ""growing area where we see great opportunity." He believes there is massive growth in cloud for google and there is momentum in new customer adoption.
In the third quarter for the first time, mobile search top the company traditional search on desktop globally. However, Mr. Pichai was ask on the earnings call about ad-blocker hurting advertising revenues. He said, "not a new phenomenon". Mr. Pichai clearly believe that ad-blockers isn't a large threat to the company advertising revenues.
The company announced that it would repurchase over $5 billion shares of their C class shares. Alphabet buyback announced was welcome with joy from shareholders who have waited for every for this to happen. Shareholders and Wall Street has wanted Alphabet to return some of the $70 billion in cash on their balance to shareholders. This buyback is kinda small when compared to other company's like Apple and IBM who have return billions to their shareholders.
Published on Oct 28, 2015By Cody Eustice
Posted in ...Market Commentary