Alphabet, the parent company of Google, said revenues for the fourth quarter reached USD 39.276 billion, up 22 percent year-on-year or by 23 percent without currency effects. Growth was in line with past quarters. For the operating profit, it slowed a bit, rising 7.0 to USD 8.203 billion. The figure includes USD 9.70 billion generated by Google and a loss of USD 1.33 billion generated by the Other Bets, much higher than the year before’s loss of 748 million. The net profit increased to USD 8.948 billion against the loss of 3.020 billion. The result suffered this year from higher interest charges but benefited from lower taxes. The loss the year before was caused by the impact of the Tax Act. Meanwhile, the revenue contribution of Google Other, investments, liquidity and workforce numbers all grew to record levels.
The gross margin went 1.5 points lower to 54.4 percent but traffic acquisitions costs (TAC) rose less fast than revenues, up 15.3 percent to USD 7.436 billion. R&D costs advanced 40 percent and were responsible for the lower operating margin of 20.9 percent, against 23.7 percent the year earlier.
By area, revenues lifted 21 percent in the US, 16 percent at Other Americas (currency neutral + 26%), 20 percent at Europe, Middle East & Africa (EMEA) and 29 percent at Asia Pacific or APAC (currency neutral + 32%). The contribution of the US to total revenues went slightly up while for EMEA, it fell to 31 percent. APAC and Other Americas were stable at 15 percent and 6 percent, respectively.
Revenues for Google climbed 22 percent while at Other Bets, they went 18 percent higher. The Other Best mainly consists of Google Fiber, Verily (life sciences), Loon, Waymo and licensing/R&D.
Record contribution from Google Other
Google Advertising revenues strengthened 20 percent. This includes own sites, up 22 percent, and third-party sites, up 12 percent. Revenues at Google Other went 31 percent higher. This section includes Google Cloud Platform, Google Play (content) and hardware. Google Advertising accounted for 83.1 percent of Alphabet revenues. Google Other contributed 16.5 percent (a record) and the Other Bets 0.4 percent.
Investments, liquidities at record level
The operating cash flow came out at USD 13.0 billion (+ 26%). Investments (capex, especially for the Google Cloud Platform) went to USD 7.08 billion, a record. Google reported a free cash flow of USD 5.91 billion. The cash position increased to USD 16.7 billion and the total liquidity is now at the record level of USD 109 billion.
The total number of employees grew by 4,399 to 98,771 in the quarter, up 23 percent year-on-year.
