The net profit of the Alphabet (NASDAQ: GOOGL) Inc., the Google holding company, in the first quarter of 2017 increased by 29% - to $ 5.43 billion, or $ 7.73 per share, compared to $ 4.21 billion, or $ 6, 02 per share, for the same period a year earlier.
The holding's revenue in the last quarter increased by 22.2% - from $ 20.26 billion to $ 24.75 billion. Google's advertising revenue was $ 21.41 billion.
Wall Street analysts on average forecasted the profit of Alphabet at $ 7.34 per share with total revenue of $ 24.2 billion.
The figures exceeded the market expectations due to the high demand for Internet advertising. The scandal with advertising on YouTube did not have a significant impact on Alphabet results.
The experts regard such growth rates as exceptional considering the size of the corporation. "If the size company of Google demonstrates such growth, it confirms the high quality and usefulness of its products," says Colin Gillis, a BGC Partners analyst. "It is the dominant force in digital advertising."
According to eMarketer, in 2017 Google will control 61.6% of the market for contextual advertising displayed in search results, compared with 60.6% last year. Advertising on mobile devices is cheaper than on desktop PCs, but growing sales successfully compensate for this difference, analysts say.
According to the financial director of Alphabet, Ruth Porat, YouTube's revenue "continues to grow at a significant pace." In February, a scandal broke out due to the fact that ads of a number of large advertisers were placed on YouTube along with videos that incited hatred and homophobia. Some companies have opted out of advertising on YouTube, but this did not affect the final result of Google (YouTube alone is not published). According to a number of experts, advertisers have used the scandal to squeeze out from Google more profitable tariffs.
Revenues in the direction of Other Bets increased by 48%, to $ 244 million, but the operating loss also increased - from $ 774 million to $ 855 million.
The number of conversions on advertisements in January-March rose 44% in annual terms. For seven consecutive quarters this indicator exceeds 22%. At the same time, the cost of each click dropped by 19%.
The cost of buying Internet traffic increased from 21% to 22% of revenue.