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We finally know how much money Nest makes

Google’s smart-home gadget brand generated $726 million in revenue last year.

Smart thermostat Nest George Frey / Getty
Rani Molla is a senior correspondent at Vox and has been focusing her reporting on the future of work. She has covered business and technology for more than a decade — often in charts — including at Bloomberg and the Wall Street Journal.

How much money is Nest, Google’s smart-home gadget brand, bringing in?

Google’s parent company, Alphabet, famously doesn’t give much detail about how its individual businesses are performing. Even YouTube’s finances are still opaque.

But a one-time accounting change, detailed in Alphabet’s first-quarter results today, reveals that Nest generated $726 million in revenue last year and an operating loss of $621 million.

How do we know that?

Last quarter, Nest was reabsorbed into Google, where it has joined the company’s broader hardware team. Previously it was a subsidiary company under Alphabet, which aggregates financial results for all of its non-Google businesses in a segment called “Other bets.” As part of the change, for investor context, Alphabet today published a version of all of last year’s financials as if Nest were part of Google and not an “Other bet.”

After comparing the two sets of results, we learned that Nest generated $278 million in revenue during last year’s holiday fourth quarter, which is almost as much as it did in all of 2015, according to previous Recode reporting. But it still hasn’t passed $1 billion in sales, and it isn’t close to being profitable on an operating basis.

Nest represented most of the revenue for the “Other bets” — 60 percent of it in 2017 — but far less than 1 percent of Alphabet’s total revenue.

Google bought Nest for more than $3 billion in 2014. And when it formed the Alphabet holding company structure in 2015, Nest was to be one of the main beneficiaries, running as a semi-independent subsidiary under its founder, former Apple executive Tony Fadell.

But Fadell left in 2016, and Nest was never as successful as it could have been on its own. Now let’s see how it does as part of Google — though it’s unlikely we’ll find out more numbers anytime soon.

Overall, Alphabet made $9 billion in profit on $31 billion in revenue last quarter.

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