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Google Beats Wall Street Expectations on Earnings, Unloads Alphabet Details

The Alphabet numbers are finally here.

Justin Sullivan | Getty Images

For its big earnings debut, Alphabet showed Wall Street what it wanted to see: Google’s business is doing fine.

The Google holding company reported its fourth-quarter earnings on Monday, the first ever in two segments, with separate figures for its core business and its motley moonshots.

Google altogether beat expectations, reporting net revenue, minus partner site payout, of $17.3 billion on $8.67 earnings per share. Wall Street was looking for something around $16.9 billion on $8.10 in profit.

More critically, Wall Street was waiting for the profit margins, which have been moving downward in recent years. This quarter should show how meaty Google’s core business is when its costly ventures are stripped away.

It’s higher, but not by much. For this quarter, Google’s operating income was $6.7 billion for a margin of 32 percent. For the same quarter last year, Google reported $5.6 billion in operating income, a 31 percent margin.

The stock went up 8.24 percent in after-hours trading.

Now to the other key numbers:

Google Inc.

  • Ad metrics: Google proper still reports just two detailed figures on its core ad business: Paid clicks — how many times advertisers pay — which is trending up; and cost-per-click — how much they pay — which is trending down. For the holiday quarter, paid clicks rose 31 percent annually but CPC dropped 13 year on year. In the prior quarter, those figures were 23 percent and 11 percent, respectively.
  • Other sales: This is where we can see the health of Google’s other businesses besides ads, like Play, hardware sales and enterprise. It was $2.1 billion for the fourth quarter. It was $1.95 billion in the same quarter last year.

Other Bets

Recall that these are aggregated figures for Alphabet’s varied non-Google companies, from its X robotics lab, its Nest smart-home unit and its two health care companies. Any income from Alphabet’s two venture capital arms belong under a different consolidated reporting line.

  • What they made: For all of 2015, the eight other companies in Alphabet not named Google brought in $448 million.
  • What they lost: And the Alphabet companies bled $3.57 billion. Analysts were guessing in a range from $2 billion to $6 billion.
  • What they cost: Capital expenditure for 2015 was $869 million. Google spent $2.1 billion in cap ex during just the fourth quarter, down from $3.55 billion a year ago.

Alphabet/Google CFO Ruth Porat will be on the earnings call at 4:30 pm ET, along with Google chief Sundar Pichai. We’ll tune in and flag the best parts below.

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