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Home / Business / The alphabet is stuck on all cylinders – The Motley Fool Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) released mixed quarterly results in 2018 on Thursday after the market closed – at least in relation to Wall Street's expectations. Never remind you that Google's parent company does not provide specific quarterly guidance. To be ready, Alphabet insists that it is pleased with the results of the business, now containing eight products each with a billion

The alphabet is stuck on all cylinders – The Motley Fool Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) released mixed quarterly results in 2018 on Thursday after the market closed – at least in relation to Wall Street's expectations. Never remind you that Google's parent company does not provide specific quarterly guidance. To be ready, Alphabet insists that it is pleased with the results of the business, now containing eight products each with a billion




] monthly active users.

Still, with stocks down at around 3% on Thursday after this writing (albeit after a 4% increase on Thursday in front of the report), let's dig deeper to see what ran the alphabet when it kicked

  Dinosar- skeleton at Googleplex Headquarters with a

IMAGE SOURCE: ALPHABET / GOOGLE.

Alphabet results: Raw numbers

By dealing with headline numbers first, alphabet revenue increased 21

.5% year over year (22% in fixed currencies) to $ 33.74 billion, giving 36.5% growth in GAAP net income to $ 9,191 billion, or $ 13.06 per diluted share.

For perspective, and although we do not tend to be very aware of Wall Str owner's requirements, consensus estimates predicted significantly lower earnings per share of $ 10.40 on higher revenue of $ 34.05 billion.

Some warnings here: Unlike favorable exchange rate movements in the first half, the Alphabet's top line reflects this unfavorable currency headwind this quarter, reflecting revenue growth thanks to the strengthening dollar. We should also note that the bottom line includes an approximately $ 1.38 billion gain on equity securities related to the Alfabet's various investments (more than below) – although Alphabet would still have exceeded expected earnings expectations, even without it.

Break It Down Further, here's how the two core industry segments of the alphabet – Google and other games – each performed this quarter compared to the same year ago:

Metric 3 months ended September 30, 2017 3 months ended September 30, 2018 Growth (YOY)
Google Revenues $ 27,655 billion $ 33,594 billion 21.5%
Google Revenue $ 8.582 billion $ 9,490 billion 10.6%
Other operating income $ 117 million $ 146 million 24.8%
Other operating income ($ 650 million) $ 727 million) Not applicable

DATE: ALPHABET QUARTERLY FILING. YOY = year over year.

On Google

On Google, Finance Director Ruth Porat appointed the relative power of mobile search to help drive growth, as well as its "many [other] products that help billions of people every day."

But even it seems like an understatement. During the following conference call, CEO Sundar Pichai confirmed that Google Drive officially became the company's eighth product to hit a billion monthly active users. The disk goes hand in hand with Google Search, Gmail, Chrome, Maps, YouTube, Android, and the Google Play store when you reach the 10th milestone.

Google advertising revenue rose 20.3% year to $ 28.95 billion, including 22% growth from Google properties to $ 24.05 billion, and an increase of 12.9% from network members' websites to 4.9 billion dollars. Meanwhile, total acquisition costs increased by steady 19.6% to 6.58 billion dollars.

In addition, the paid clicks on Google properties increased 62% and cost-per-click – a calculation that helps show how much Google makes per ad – fell 28%. As I suggested in the earnings principle yesterday morning, the latter decline is largely driven by external growth from YouTube, where ads tend to earn lower prices. Outside of Google's properties, the display on network members' websites increases 1% and cost per impression increases by 11%.

Finally, Google's unannounced revenue increased 29.2% a year later to $ 4.64 billion, led by Cloud and Play. Pichai emphasized during the conversation that the Made By Google hardware line just made a "modest" contribution to growth, primarily as Google launched its new family of hardware products just in time for the holidays. Meanwhile, daily active users of Google Home Devices have increased more than five times over the past year.

On Other Games

As expected, Google's second game segment stays worse unprofitable, with an operating loss of $ 727 million – a testament to many of its high potential businesses remaining in its pre-revenue stages .

However, the segment could achieve almost 25% revenue growth thanks to sales from Fiber high-speed internet and real-time life sciences. Pichai added that Alphabet Waymo's self-employed car industry expanded its early rider program in the quarter to launch test pricing models.

Last but not least, note that other games include Google Ventures (GV), which provides venture capital funding to convincing new companies, and CapitalG, the Alphabet's Late Growth Capital Fund. These team's consolidated efforts are reflected in the predicted profit on equity investments.

Looking forward

The alphabet once refused to provide specific financial advice. However, Porat reminded us that sales costs will increase in the fourth quarter, driven by seasonal trends in the hardware business, as well as planned content acquisition costs for YouTube. Sales and marketing also tend to be lean more towards the back half of each year, especially during the vacation. She also insisted that Alfabetes's strategic investments will be carefully calculated with long-term growth in mind, while investments will continue to reflect infrastructure investment, including "a number of data center construction projects along the way, as well as continuous expansion in our computing capacity."

Fair enough. Finally, to add to the alphabet's currency-driven income shortage, it is clear that Alphabet is shooting on all cylinders as it continues to expand its already amazing range. And it is equally surprising that, as I wrote this time, stocks have already claimed the bulk of their early losses.


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