Yahoo Finance Market Is Unimpressed By Alphabet Inc (GOOG, GOOGL) Earnings Beat
Alphabet Inc (Nasdaq: GOOG, GOOGL) reported another strong quarter of growth on Monday afternoon, beating consensus estimates on both earnings and revenue.
Google's parent company reported first-quarter earnings per share of $9.93 on revenue of $31.15 billion. Analysts had been expecting EPS of $9.28 and revenue of $30.29. Revenue was up 26 percent compared to a year ago.
Advertising revenue was $26.6 billion on the quarter, up 24.4 percent. Total acquisition costs on the quarter were $6.28 billion, down from $6.45 billion last quarter. TAC as a percentage of advertising revenue was 24 percent, in line with last quarter.
Paid clicks on Google properties were up 8 percent year-over-year, while cost-per-click, how much its advertisers pay, was down 7 percent.
[See: 8 Catalysts That Are Moving Amazon Stock.]
Google's "other revenues," which include Google Cloud, smart-home division Nest, and hardware sales, came in at $4.3 billion, up 34.3 percent from a year ago.
"Other bets" revenue, which includes health care company Verily, internet service provider Google Fiber and autonomous vehicle unit Waymo, was $150 million. Other bets revenue dropped steeply from $409 million in the fourth quarter, which reflects Alphabet transitioning Nest revenue from "other bets" to "other revenues." Other bets generated operating losses of $571 million in the first quarter.
"Our ongoing strong revenue growth reflects our momentum globally," CFO Ruth Porat says in a statement. "We have a clear set of exciting opportunities ahead, and our strong growth enables us to invest in them with confidence."
GBH Insights head of technology research Daniel Ives says Alphabet has positioned itself for a strong finish to 2018.
"We believe Google has a number of organic growth investments that will start to bear fruit in [the second half of 2018] as ad growth, mobile impression strength and a host of other initiatives lay out a compelling growth story for Google in 2018 in our opinion despite regulatory and ad growth worries," Ives says.
[See: 7 of the Best Stocks to Buy for 2018.]
He says YouTube will remain the crown jewel of Google's advertising business.
"We continue to believe YouTube is the major growth driver on the ad front, as this dominant platform now has north of 1.5 billion users watching on average 60 minutes per day," Ives says.
GBH Insights has a "highly attractive"rating and $1,280 price target for GOOGL stock.
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