Alphabet Q1 2017 Financial Results: Google Parent Company Starts The Year Strong
If it comes to business performance, it is a good time to be working in Google this year.
Alphabet Inc., the parent company of Google, posted a strong revenue performance for Q1 2017. Alphabet showed a 22 percent revenue increase, a bulk of which came from ads. The performance exceeded expected earnings, giving the company a successful run despite recent controversies such as companies pulling their ads from YouTube for videos containing negative content.
'A Terrific Start'
Alphabet released its first quarter performance via its investor page. And based on the numbers, Google outperformed the projected numbers.
"Our excellent results represent a terrific start to 2017, with revenues up 22% versus the first quarter of 2016 and 24% on a constant currency basis. We clearly continue to benefit from our ongoing investments in product innovation and have great momentum in our new businesses across Alphabet," said Ruth Porat, chief finance officer of Alphabet.
Here is Alphabet by the numbers:
Revenue: $24.7 billion (actual) vs. $24.1 billion (expected) — a 22 percent increase from 2016's Q1 numbers
EPS, GAAP: $7.73 per share (actual) vs. $7.41 per share (expected)
Operating Income: $6.6 billion
Net Income: $5.4 billion
Google Remains The Top Brand
Google remains to be the biggest and most important product for Alphabet. It posted a Q1 sales of $24.5 billion. Under Google are other profitable products such as cloud services and data management products.
Advertising remains the main cash cow of the company, earning $21.4 billion from advertisers. This performance came amid controversies surrounding the Google product YouTube. On March, several products such as Wal-Mart, Pepsi, and Starbucks pulled their ads from YouTube over racist videos. The controversy stuck to the management's minds, and Google will address the issues moving forward.
"We have taken it pretty seriously and we've taken significant steps," said Google CEO Sundar Pichai during a conference call with analysts. "It's super important for us that this ecosystem works well."
The controversy prompted YouTube to revamp its policies after the ad boycott, giving clients more control where their ads appear.
Here are Google's figures:
Google Properties Revenues: $17.4 billion
Google Operating Income: $7.6 billion
Google Advertising Revenue: $21.4 billion
Google Segment Revenues: $24.5 billion
Other Bets Operating Loss: $855 million
The "Other Bets" are Alphabet products that are not Google, such as Waymo (self-driving car), Nest (smart home tech), Verily (life and health sciences), and X (research and development facility). The operating loss can be explained by the nature of these entities; these are primarily research and development departments, thus there are no clear business models for profit generation.