With $22.4 billion in earnings, Google parent company Alphabet is still running one of the largest ad operations in the world.
The company reported a 20 percent revenue increase year over year with an operating income of $6 billion and earnings per share of $9.06. GAAP net income was $5.06 billion at $7.25 earnings per share.
Of that, the Google segment comprises $22.2 billion, and ‘Other Bets’ (which are companies outside of Alphabets core competencies) comprises $197 million. ‘Other Bets’ is also running an operating loss of $865 million. The company also announced a $7 billion stock buyback.
While its advertising revenues are expectedly high, Google’s mobile advertising revenues are higher than ever. Approximately 59.5 percent of the company’s global ad revenue will come from mobile ads this year, compared to the 45.8 percent it amounted to in 2015.
“We had a great third quarter, with 20% revenue growth year on year, and 23% on a constant currency basis. Mobile search and video are powering our core advertising business and we’re excited about the progress of newer businesses in Google and Other Bets,” said Ruth Porat, CFO of Alphabet, in a statement.
Google’s ad revenue makes it the world’s second largest ad business, after Facebook, and it’s market value makes it the world’s second biggest company in terms of market value, after Apple.
According to the Wall Street Journal, Google controls 95 percent of the mobile search market, compared to 78 percent on personal computers. While Facebook has proved a worthy competitor in the mobile space, it’s Google that continues to lead.
However, Google doesn’t want to live out its days as an ad business. It’s ‘Other Bets’ department always seems to be an area of speculation for analysts, as it’s yet to generate a profit. ‘Other Bets’ did however, generate a $865 million in losses over $197 million in revenue. Under this category are Nest, Google Fiber, Verily and others.
In addition, however, are some other endeavours that are actually generating revenue. Alongside Android, YouTube, apps and a suite of Google-branded internet products, the tech giant recently released line of smartphones and smart home devices. Non advertising revenue increased by 39 percent to $2.43 billion. As the company continues to broaden its reach, it will likely increase its investment in the cloud as well as new hardware.
While Alphabet’s new smartphone line, the Pixel and Pixel XL, didn’t appear in this quarter’s earnings report, it will be interesting to see what impact these newly launched products have as the holidays draw near.