Alphabet Inc(NASDAQ: GOOGL) in the first quarter of FY 17 has posted better than expected results as its core advertising business continued to grow at an extraordinary rate and problems such as an advertiser boycott of YouTube had little impact. Google has aggressively shifted the focus of its business to mobile advertising. Facebook and Google had accounted for 99 percent of the industry growth in digital advertising in 2016. The mobile ads command lower prices than desktop ads, but growing volume is more than making up the difference. Google is expected to command a 61.6 percent share of the search ad market worldwide in 2017, up from 60.6 percent in 2016, as per the research firm eMarketer. The company’s profit grew 29 percent to $5.43 billion in the first quarter of FY 17 from $4.21 billion, a year earlier.
In the first quarter of FY 17, Alphabet has reported the adjusted earnings per share of $7.73, beating the analysts’ estimates for the adjusted earnings per share of $7.34. The company had reported the adjusted revenue growth of 22.2 percent to $24.75 billion in the first quarter of FY 17 from $20.26 billion in the corresponding quarter last year, beating the analysts’ estimates for revenue of $2.47 billion.
Moreover, Google’s non-advertising revenue, which consists mainly of the cloud computing business, the Pixel smartphones and the Play store, grew 49.4 percent to $3.10 billion in the first quarter of FY 17. On the other hand, GOOGL’s “Other Bets”, separate business units including the Waymo self-driving car business, Google Fiber, thermostat-maker Nest and the life sciences firm Verily has continued to post large losses and modest revenues.
Additionally, the aggregate paid clicks grew 44% year over year, while paid clicks on Google properties grew 53%. The paid clicks on Google Network Members properties have also increased 10%. The aggregate cost per click fell 19% year over year, and cost per click on Google properties fell 21%. Alphabet has changed its methodology for paid clicks and cost per click, resulting in a “modest increase in paid clicks and a modest decrease in cost-per-click.”
GOOGL stock has risen 20.83% in the last one year (source: Google Finance). According to tipranks.com, 22 analysts has covered the stock while recommending a “Moderate Buy”. Alphabet has an average price target of $983.33, which is a further upside of 10.31%.