Alphabet, cough, Google most valuable biz on Earth as it pours billions into 'other bets'
Plenty of doh-ray-mi from ads as Fiber et al gobble cash
Alphabet, Google's new parent-holding-company-thing, has reported stellar end-of-year results: revenues in the final quarter of 2015 hit $21.3bn, and profit reached $4.9bn.
The figures pushed Alphabet's stock price up eight per cent in after-hours trading, making it, for the moment, the most valuable company on the planet by market cap: roughly $570bn versus Apple's $535bn.
"Our very strong revenue growth in Q4 reflects the vibrancy of our business, driven by mobile search as well as YouTube and programmatic advertising, all areas in which we've been investing for many years," said Ruth Porat, CFO of Alphabet, in a canned statement.
"We're excited about the opportunities we have across Google and Other Bets to use technology to improve the lives of billions of people."
Here's the lowdown on the figures from the Chocolate Factory's final quarter, ending December 30, 2015:
- Alphabet's net revenue for the three months was $21.3bn, up 18 per cent on the same quarter last year. If you eliminate currency fluctuations, its revenues rose 24 per cent, but the strong dollar hurt the Silicon Valley giant. For the full year, Alphabet's Google revenues were $74.5bn, up 13.4 per cent on $65.7bn in the year before.
- Alphabet's net income was $4.9bn, up four per cent from $4.7bn in the year-ago period. Over the full year, Alphabet's Google operating income hit $23.4bn, up 23 per cent from $19bn in 2014.
- GAAP earnings per share for the quarter will be $7.06, which is slightly higher than analysts were expecting.
- Expenses for the quarter amounted to $14bn, which Porat said was in part due to a greater investment in data centers and the loss of $180m from the sale of a business.
- Cash: Google is still sitting on a pile of cash and securities – $73bn for the end of the financial year. $43bn of that is held overseas to avoid paying repatriation taxes.
- Advertising: Porat said that the firm is reporting strong growth in advertising revenues, with YouTube bringing in much more cash this year, up 20 per cent, along with other media advertising. Paid clicks are up 31 per cent on the year.
CEO Sundar Pichai said that YouTube viewership among the 19-45 age group now has more viewers than any US cable channel. YouTube viewing in the living room more than doubled in the last year, he said, pushing up revenues.
- Other bets, including Google Fiber, self driving cars, the robotics division, and other blue-sky projects, lost $3.6bn over the full year compared to the previous year's $1.9bn loss. The other bets did bring in $448m in revenues in 2015, compared to $372m in 2014, (mainly from Google Fiber, Nest, and Verily) against capital expenditures of $869m – the vast majority of which is down to Fiber.
"Our results show great momentum and the opportunity we have with mobile search," Pichai said, adding that the Android ecosystem was blooming – not just on smartphones but in smart watches and cars.
Mobile traffic outpaced desktop search on Thanksgiving Day, Black Friday, and in the run-up to Christmas. Pichai said that this showed people were integrating mobile search into their shopping.
As for Google's cloud plans, Pichai said that cloud computing was at a tipping point and businesses are now piling into the technology, and the firm is now running over four million apps in its cloud services.
When asked about Google's plans for artificial intelligence, Pichai said that the firm was making big strides and hadn't expected to get the Go win this year. He wouldn't be drawn into a timescale, but said usable AI will be increasingly integrated into Alphabet products. ®