Alphabet Reports Strong Google Ad Sales, Short On Profit

Quarterly results from Google showed the complexity of operating its internet empire, as steady growth in online advertising sales was overshadowed by rising costs and a weak performance from some long-held company investments, reports The Wall Street Journal.

Analysts and investors are encouraging the company to plow ahead on new advertising opportunities in units like video platform YouTube and the ubiquitous Google Maps app. Yet such efforts to create new profits across the conglomerate come as the Trump administration and 50 attorneys general undertake wide probes into Google, including whether it has an unfair advantage over smaller advertising rivals.

Google’s parent, Alphabet Inc., reported third-quarter revenue of $40.5 billion, a rise of 20% from the same period last year. While that would be enviable growth for many companies, the clip is below Google’s pace historically.

Advertising revenue rose to a record $33.9 billion, contributing to an overall profit of $7.1 billion. That profit was lower than Wall Street’s expectations and down 23% from a year earlier, when the result was boosted by changes to the U.S. tax code. The company’s margin for the latest period was also crimped as costs rose, a long-term concern for investors.

Google said the latest quarter was another busy time for adding “Nooglers,” or New Googlers. It hired 6,450 full-timers, swelling that head count to 114,096.

Advertising is central to the Google narrative. The company is increasingly a player in local advertising for small businesses, and executives said they expected to continue to increase their take from that segment of the market.

Google provides comparatively scant disclosures on other areas of its business. Alphabet has resisted requests from analysts to detail the performance of YouTube, for instance, and combines results from nascent units like the Waymo self-driving car division in a line item that it calls simply “Other Bets.”