Alphabet, the holding company formed around Google, reported its third quarter earnings today. The company grew its revenue 20 percent over the same period last year, to $22.45 billion. Its profit also improved, climbing 27 percent over the same period last year to $5 billion. These numbers were only slightly better than analysts expectations, and shares of Google didn't move much in after-hours trading. But its nonetheless impressive that a company in its 18th year is still posting such strong and continuous growth in both revenue and profits.
Google is really the only company making money at Alphabet, and advertising still makes up the vast majority of Google's revenue. Other revenues, which includes things like hardware sales, now accounts for $2.4 billion, a little over 10 percent of the total. Other Bets, which includes things like Google Fiber, Project Loon, driverless cars, and other moonshots, continued to slowly improve its financial state, but still isn't anywhere close to profitable. Other bets revenue grew 40 percent to $197 million. Its losses, meanwhile, dropped by about 12.5 percent to $865 million. Clearly, Alphabet could continue to fund these experiments at a loss, but as recent layoffs at Google Fiber show, its going to continue being very strict with how it allocates resources to new ventures.
On its earnings call Alphabet gave the same speech it has the last couple quarters. The growth in advertising revenue is being led by increases in mobile search and also by YouTube. While YouTube gets highlighted as a driver of financial success, Alphabet still isn't pulling back the curtain on exactly how much revenue YouTube generates, or whether its video division is turning a profit. Chief Financial Officer Ruth Porat also affirmed Alphabets simultaneous commitment to experimenting with new lines of business while remaining disciplined with capital outlays. Translation: moonshots aren't going away, but they will be kept on a tighter leash.
Google CEO Sundar Pichai spoke about the company's fundamental belief that computing is becoming an ever bigger part of people's daily lives. That is the motivation to create products like the new Google Assistant, and also to move into hardware with products like the Pixel phone. "To really think and evolve it, you need to think about hardware and software together," said Pichai. "That is where a lot of innovation happens."