Nest Moves to Google Other Revenues, Other Bets Still Climbs

The release of Google parent Alphabet Inc.’s GOOGL first quarter financial results took center stage on Monday afternoon, as investors waited to see how the tech industry bellwether performed amid a shaky market. Shares of Alphabet climbed slightly in after-hours trading after it posted better-than-anticipated Q1 earnings and revenue.

The company posted adjusted first quarter earnings of $9.93 per share, which topped the Zacks Consensus Estimate of $9.21. Meanwhile, Alphabet reported Q1 revenues of $26.5 billion. This also beat our consensus estimate of $24.29 billion. Investors should note that our revenue estimate excludes Google Network Members revenues (also read: Alphabet Posts Earnings Beat, Google Other Revenues Climb 35%).

On top of Alphabet’s basic earnings and revenue results, investors are also likely interested in the company’s growth in specific business areas.

Google’s core search business has long been a strong revenue driver. But the company has also made an effort to enter an array of industries that are set to boom, from mobile payments and e-commerce to cloud computing and artificial intelligence.

Let’s take a quick look at how Alphabet’s specific business units performed in the first quarter.

Advertising

Alphabet reported revenue of $26.64 billion in its vitally important advertising unit, which marked a 24.4% climb from the year-ago period. This continued expansion is great news for investors because there was a time not too long ago that people feared the shift to mobile would negatively impact Google’s bread and butter advertising business.

Google Other Revenues

The first quarter also saw the company’s growing “Google other revenues” category, which is comprised of the Google Play Store, Google Cloud offerings, and its hardware initiatives, surge by 35% to hit $4.35 billion.

Investors should note that Alphabet’s growing Nest “smart” home automation division, known for its thermostats, smoke detectors, and security cameras, joined Google’s hardware team in the first quarter. This means that Alphabet’s Nest now falls under the Google other revenues unit and not its more mysterious “Other Bets” segment.

Other Bets

Alphabet’s Other Bets subsidiaries now include Google Fiber, which provides broadband internet services in select cities throughout the U.S., as well as Alphabet's life sciences brand, Verily. With that said, taking into account Nest’s shift, Other Bets revenues still climbed by roughly 14% from the year-ago period to $150 million.

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