Friday, October 27, 2017

Alphabet's Mobile Ad Revenue Surges



Alphabet Inc on Thursday reported stronger-than-expected advertising sales and higher operating margins, boosting its shares as investors brushed off concerns about higher costs for acquiring mobile users.

The stock was up nearly 3 percent at $1,001.50 after the bell. They have gained 25 percent this year.

According to Reuters, third-quarter revenue for Alphabet, the parent company of Google, jumped 24 percent to $27.8 billion, above the average analysts’ estimate of $27.2 billion. Profit of $6.7 billion, or $9.57 per share, was well ahead of Wall Street estimates.

Alphabet, along with much of the tech sector, has enjoyed torrid growth in recent years as advertising moves from traditional media to the internet and consumers flock to an ever-expanding array of digital devices.

While Google faces political pressure, especially in Europe, over its growing dominance and its role in spreading propaganda online, those problems have yet to hit the bottom line.

The third quarter was the 15th in a row in which Alphabet has shown double-digit, year-over-year consolidated sales increases. The pace is not slowing down, with the growth rate reaching its highest level in nearly five years.



Ad sales at Google, Alphabet’s main operating unit, account for the vast majority of the company’s revenue. The ad business faces competition from Facebook Inc but has continued to grow as more users turn to Google’s YouTube and mobile search services.

Google’s other revenue, which includes hardware such as the Pixel smartphones and Home speakers as well as the cloud computing business, also enjoyed solid growth. Sales from non-ad businesses rose 40 percent from a year ago to $3.4 billion in the quarter.

Among Google’s top priorities is expanding its salesforce to catch up with Amazon Web Services in providing corporate computing via large data centers, Pichai said. Alphabet does not break out cloud revenue, but Jefferies analysts estimate it at about 15 percent of Google’s other revenue.

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