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Google's parent company has announced earnings growth on a slightly slower growth in its business, a sign of uncertainty in its core business at a time when it is also facing a growing reaction from regulators and the turmoil that reigns in its own corporate culture.
Alphabet Inc. said Thursday its net profit jumped 37 percent to $ 9.19 billion in the quarter ending September, up from $ 6.7 billion in the same period last year. This growth has exceeded analysts' estimates.
Overall revenues, however, increased 21% to $ 33.74 billion, compared to 24% for the same period last year. Advertising revenue, which accounts for the vast majority of sales, rose 20% to $ 28.95 billion.
The results come after a period in which Alphabet lost more than one-sixth of its market capitalization in three months. Google's parent company was dragged down by the stock market downturn in October. On Wednesday, its shares reached their lowest level in five months, before rebounding 4.4% Thursday, before the close of the quarterly report, which should reach $ 1,097.18. Shares slid more than 3% after closing when the results were released.
Google answers questions from lawmakers in Washington and Europe since the Wall Street Journal announced earlier this month that the company had never spoken to a user of a computer bug that exposed the privacy data of hundreds of thousands users. This incident led the company to close the consumer functionality of its Google+ social site.
Over the past year, Google has been rocked by internal turmoil ranging from working with the US military to its projects in China to managing gender issues in its workforce.
Google CEO Sundar Pichai said Thursday that the company had fired 48 people for sexual harassment in the past two years, according to a copy of the revised Wall Street Journal note.
Alphabet had 80 110 full-time employees at the end of last year.
Mr. Pichai's memo responded to a New York Times article that Google had protected three senior executives over the last decade after they were charged with sexual misconduct, including one to whom he had given $ 90 million. dollars when he left in 2014. Google refused. comment on the details of the Times' story.
Mr. Pichai stated in the memo that no one returned in the past two years had received any exit solution. Google is "very serious about creating a safe and inclusive workplace," he wrote.
Google said Thursday that its non-advertising business is growing globally faster. Sales in its "other" revenue category, which includes cloud computing services and hardware devices such as Pixel smartphones, grew 29 percent to $ 4.6 billion from $ 3.6 billion.
The growth of Google's core advertising business remains fast for a company of this size, but it faces a number of challenges.
Google is experiencing increased competition in the online advertising industry from
Amazon.com
Inc.
which represents a growing number of product searches by US users, said Andrew Lipsman, an analyst at eMarketer Inc. Google's share of US digital advertising spending is expected to fall to 37% this year, compared to 39% last year , according to eMarketer. Amazon's share climbed to more than 4% from 2% last year.
And Google has had to deal with rising costs. Payments to channel partners accounted for 13.1% of revenue generated by the company's website traffic, higher than the company spent a year ago and in the second quarter of this year . This figure is closely watched by investors who are concerned that Google buys some of its growth through expensive contracts with
Apple
Inc.
and others.
Revenues excluding payments to advertising partners amounted to $ 27.1 billion, an increase of 22% over the previous year but slightly lower than the $ 27.3 billion expected by analysts.
The Company's capital expenditures increased by 49% to $ 5.2 billion, as the Company continues to focus its efforts on hiring staff and developing futuristic technologies.
"They are investing all their money in strengthening their dominant position," said Brian Wieser, Senior Research Analyst at Pivotal Research Group. "The question is, will they invest in products that sell more ads or build flying cars that might never take off?"
In a telephone conversation with analysts, Chief Financial Officer Ruth Porat said most of the increase in capital spending was due to the hiring of technical talent, with the cloud computing unit recording the largest increase in staff.
Pichai answered analysts' questions about Google's exploration of China's expansion into China, fearing that the company would be forced to comply with the country's strict Internet censorship. The CEO said Google "is constantly looking for ways to better serve Chinese users", but declined to give details on this plan.
Write to Douglas MacMillan at [email protected]
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