Ad revenue fends off rising Alphabet costs - Mobile World Live

Ad revenue fends off rising Alphabet costs

05 FEB 2019

Alphabet’s advertising business powered the company past controversy and increased spending to an $8.9 billion profit in Q4 2018.

Revenue grew 22 per cent year-on-year from $32.3 billion in Q4 2017 to $39.3 billion in the recent quarter, 83 per cent of which is attributable to advertising driven by mobile search and YouTube. Google’s cloud, hardware and Play Store businesses fuelled 31 per cent growth in Alphabet’s “other revenue” category, which increased from $5 billion in Q4 2017 to $6.5 billion.

Speaking on the company’s earnings call, Google CEO Sundar Pichai said it sold “millions” of smart speakers during the quarter, adding one out of every seven Google Home devices activated during the period was a Google Home Hub.

The company’s earnings appeared unaffected by recent controversy, including a backlash against Google’s development of a censored search engine for China and handling of sexual misconduct complaints.

But Alphabet’s growth came at a cost. Total expenses amounted to $31 billion, up from $24.7 billion, and included traffic acquisition costs of $7.4 billion (up 15 per cent) and $10.5 billion in other costs (up 34 per cent) related to content acquisition, data centres and hardware.

Capex jumped 64 per cent from $4.3 billion to $7.1 billion, which CFO Ruth Porat attributed primarily to Google’s investments in new offices, along with data centres and servers for its cloud business.

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Diana Goovaerts

Diana joins Mobile World Live as its new US Editor, reporting on infrastructure and spectrum rollouts, regulatory issues, and other carrier news from the US market. Diana comes to GSMA from her former role as Editor of Wireless Week and...

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