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Alphabet Posts Strong Revenues, But Taxes Hit Earnings

Tim Maytom

Google Switzerland
Google's parent company Alphabet posted its Q4 financial results, with profits coming in below analysts' expectations, largely due to higher tax rates. The company nonetheless celebrated its strong revenues for the quarter and full year, driven by diversifying its business beyond advertising.

While advertising still accounts for the majority of Alphabet's revenues, bringing in $22.4bn (£17.9bn) in Q4, Ruth Porat, chief financial officer for the firm was keen to point out that the company was broadening its scope, with revenues from hardware, app sales and its cloud business all up.

"We see tremendous potential ahead for these businesses, as well as in the continued development of non-advertising revenue streams for YouTube," said Porat during the earnings call to investors. She also spotlighted the company's Nest smart home products, which saw sales double during key holiday periods. Google Home, the company's smart speak, and its Pixel smartphone also saw good sales, and were praised by CEO Sundar Pichai.

"We're committed to this for the long term as a great way to bring a beautiful, seamless Google experience to people."

Overall revenues were up to $26.1bn, growing 22 per cent year-on-year, and 16 per cent quarter-on-quarter, but net income for the quarter only grew by 8.2 per cent year-on-year to $5.3bn.

Paid clicks on Google ads rose 36 per cent year-on-year, but cost-per-click was down 15 per cent as Google continued to invest in mobile ads, which currently command lower prices. Google also saw a greater shift towards more ads on YouTube, which are seen as a key growth driver.

Looking at 2016 overall, Alphabet brought in $90bn in revenues, up 20 per cent on 2015, and even though provisions for income tax rose from $3.3bn to $4.6bn, net incomes grew by 23 per cent year-on-year to $19.5bn.

 

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