Tuesday 20th November 2018

Google Owner Alphabet Sees Profits Soar

- April 24, 2018

Profits at Google-owner Alphabet jumped almost 73% in the first three months of the year, as revenues from internet advertising soared.

The strong results came despite fears that rising costs and regulation could undermine the search giant’s performance.

First-quarter net income rose to $9.4bn (£6.7bn) from $5.4bn a year earlier, beating analyst expectations.

Revenue jumped 26% to $31.1bn from $24.8bn.

During the quarter, the search giant enjoyed a $3bn boost from a change to accounting rules, as well as a $1.1bn uplift from currency exchange movements.

However, it attributed much of the growth to higher pricing for online ads on its Google search engine, YouTube video service and partner apps and websites.

Ivan Feinseth, an analyst at Tigress Financial Partners, said: “The strong economy has companies spending more on advertising and we have an ongoing migration from traditional types of media advertising to greater online and social media-based advertising.”

Mounting pressure

Alphabet’s profit margins have fallen in recent quarters as it reinvests in areas of its business such as cloud computing and hardware.

And the firm admitted capital spending almost tripled to $7.7bn during the first quarter.

Its shares have also fluctuated in 2018 amid mounting pressure from regulators to change its business practices.

Investors are particularly worried about the European Union’s new General Data Protection Regulation (GDPR), due to come in on 25 May, which will give the public more control over their data and ramp up fines for data breaches.

Some analysts believe it could prompt some users to reject receiving personalised ads online, hitting Google’s sales.

However, in a conference call with reporters, Google boss Sundar Pichai played down the concerns.

“GDPR is a fairly new public topic, but for us it is not new – we started working on it 18 months ago.

“We are working very closely with our publishers and our partners‚Ķ It is a big effort, we are very committed to it and to getting it right.”

Alphabet shares jumped almost 1% in after-hours trading before slipping back.

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