Google parent company Alphabet just announced financial results for the first quarter of 2018, and the news is good across the board. The company took in a whopping $31.15 billion over the three-month period ending March 31st, which is a 26% increase of Q1 of 2017. After expenses, Google had $9.4 billion in net income for Q1.
Analysts had projected Alphabet's revenue numbers to be slightly lower, so the stock initially shot up in after-hours trading. The price has since dropped back down as of this posting to about where it was at close today. This report will probably still help alleviate some investor fears, though. Alphabet's stock price has been sliding in recent months due to concern over privacy and regulatory impacts. The drop in its effective tax rate will help, too. Google paid 20% last year but only 11% this time.
A few other interesting tidbits from the earnings include a big boost in expenses. Alphabet spent $10.7 billion in Q1, up 27% year-over-year. Alphabet says that's mainly due to research and development spending. Indeed, the company has added several thousand employees in the last few months (mostly at Google). Google's ad business was responsible for $26.6 billion of the total revenue, but the "other revenues" slice that includes hardware and cloud services still managed $4.3 billion (up from $3.2 billion last year).
Thanks to some accounting changes, we also have a little more clarity on some of Google's sub-businesses and investments. Alphabet says it earned around $3 billion on its investment in Uber and other startups. However, Nest wasn't doing so hot before it was folded into Google's hardware team. Nest was losing money, and its revenues were less than $1 billion. The Nest team should be more insulated from the cost of research and development as part of Google.
- Alphabet (PDF)