Alphabet is one of the world’s largest companies in terms of capitalization; its market value exceeds $ 740 billion. The sphere of the holding’s interests is Internet search engines, cloud computing and advertising platforms. The main asset of the company is Google. Alphabet also owns several companies, which previously belonged to Google Inc.
In the I quarter of 2018, the parent company Google increased its net profit by 73%, to $ 9.4 billion. This is the highest rate of the profit growth since the end of 2009. Revenues increased despite the competition with Amazon, another American company, the eternal rival of Alphabet. The struggle for the market with Amazon has become one of the reasons for launching a new service Shopping Actions, the implementation of which can help Google become an Internet retailer of the global importance and, thus, drive out Amazon in its most profitable market.
The adjusted revenue increased by 23.5%, to $ 24.9 billion, which is the highest result since mid-2014. Meanwhile, the profitability of Alphabet on the operating profit fell to 22% from 27% a year earlier and was worse than the market expected.
A net profit of Alphabet Inc in January-March increased to $ 9.4 billion, or $ 13.33 per share. We recall that for the same period last year a net profit was equal to 5.43 billion US dollars (in terms of one share – 7.73 US dollars). In the past quarter, the holding’s revenue increased from $ 24.75 billion to $ 31.15 billion. The growth excluding currency fluctuations was 23%. This is due to the increased revenue from advertising in the Google search engine and YouTube, a decrease in taxes and revaluation of investments in start-ups.
In the I quarter, Google’s search engine revenue rose to almost $ 31 billion compared to $ 24.6 billion a year earlier. Revenues from advertising increased from $ 21.4 billion to $ 26.6 billion. The division showed an operating profit growth by 12.4% to the level of $ 8.368 billion.
New accounting rules introduced in the US also influenced the profit growth. The American holding included the current value of all its investments in companies that haven’t yet been traded on exchanges. The profit from the revaluation of investments in Uber and other start-ups amounted to 3.03 billion US dollars.
Over the past year, the value of the US corporation securities increased by 20.8%, while the value of the US stock index Standard & Poor’s 500 for this period rose by 12.5%. The publication of the contradictory reporting will certainly affect the stock quotes of the company. Most likely, investors should expect a small drop and then the quotes will be corrected.
The material was prepared with the participation of Katya Gordon,
a leading analyst of the brokerage company CT Trade