Alphabet cites rise in advertising ad prices for surge in net profits
Google owner Alphabet announced a 73 percent profit increase late Monday. The company recorded revenue sales of $31.1 billion for Q1 2018, exceeding analyst predictions of $30.3 billion as well as increasing sales by over a quarter (26 percent) on the figure last year of $24.7 billion.
“Our on-going strong revenue growth reflects our momentum globally, up 26 percent versus the first quarter of 2017 and 23 percent on a constant currency basis to $31.1 billion,” Ruth Porat, CFO of Alphabet and Google, said.
“We have a clear set of exciting opportunities ahead, and our strong growth enables us to invest in them with confidence.”
Net income in Q1 rose to $9.4 billion from $5.4 billion in the same quarter last year, which the company attributed much of the growth from higher pricing for online ads.
Advertising revenues grew to $26.6 billion, an increase of almost a quarter (24.4 percent) from last year, in addition to Cloud and Nest growth of 35 percent to $4.3 billion. “Other bets” increased by $12 million to $150 million. Despite the increase in revenue being cited as the main reason for Alphabets surge in results, with GDPR just a month away investors are concerned about how the regulation will impact these financials if users choose to opt out of ad choices.
Sundar Pichai, Google CEO, said the company was prepared for the implementation date.
“We started working on GDPR compliance over 18 months ago and have been very, very engaged on it,” Pichai said. “It is important to understand that most of our ad business is search, where we rely on very limited information to show a relevant ad or product. We are committed to meeting requirements and overall we think we will be able to with a positive impact for users, publishers and advertisers as well as our business.”
The figures come as positive news to Google’s parent company, as profit margins have slightly slumped in recent quarters following larger investments in various areas of the business such as cloud computing and new hardware.
Alphabet’s shares have also fluctuated continuously in 2018 following pressure from regulators around the company’s business practices, leaving shares short of 1 percent after trading hours.