Alphabet posts strong revenue growth as business diversification takes hold

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Google, Alphabet, Google, Sundar Pichai

Alphabet has posted fourth quarter profits and while they were below analysts’ estimates, the company has been progressing well on quite a few fronts and not just online advertisements.

Alphabet posted massive revenues through online advertisements, which is still company’s front line business. Revenues of the company rose 17.4 percent to $22.4 billion in the quarter, but the company stressed that they are broadening the business and diversifying into other segments including hardware, app sales and the cloud business. The company’s other revenue, which captures such businesses, climbed 62 percent to $3.4 billion.

The thing that hurt Alphabet is higher tax rate of 22 per cent, compared to 19 percent for the year overall, contributing to the dent in profitability.

The recently concluded holiday season has been great for other business streams of Alphabet. Company’s line of Nest smart home products witnessed huge surge in sales during the key holiday period including Black Friday and Cyber Monday. Google-branded hardware also showed promise as Google Home, a smart speaker, and the Pixel smartphone gained traction over the holidays, Google Chief Executive Sundar Pichai said during the call.

The company posted a stronger-than-expected 22.2 per cent increase in quarterly revenue as advertisers spent more to reach an expanding user base that spends more time on smartphones and YouTube.

Alphabet has been betting big on Google Fiber, home automation products Nest, self-driving technology company Waymo as well as X, the company’s research facility that works on “moon shot” ventures.

Alphabet’s net income rose to $5.33 billion, or $7.56 per Class A and B share and Class C capital stock, in the fourth quarter, from $4.92 billion, or $7.06 per share, a year earlier.

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