Google’s parent company Alphabet Inc. (NASDAQ: GOOG, GOOGL) became world’s most valuable company after Q4 earnings call during after hours yesterday. Strong earnings reported were driven by mobile search, YouTube and Programmatic Advertising. As of 1 pm today, Alphabet’s stock price reaches 777.72, with a market cap of 540.36 billion, surpassing Apple’s market cap of 527.9 billion. NASDAQ is down for 1.59% as of 1pm.
Source: Google Finance
Alphabet’s earnings per share grew 28.3% from Q4 2014 to $8.67. Revenue for the fourth quarter was 21.3 billion, increased 18% over last year and 24% in fixed FX terms, since the continued strength of the dollar has negative impact on the company’s revenue. Operating Income (GAAP) rose 22.3% to 5.38 billion and net Income (GAAP) grew 5.3% to 4.9 billion during Q4.
Q4 2015 was also the first time for Alphabet to report its earnings by segments. Core business Google was presented as a single segment while the aggregate of other Alphabet businesses was reported as ‘Other Bets’.
Google segment revenue for 2015 was up 13.5% to 74.5 billion with operating income up 23.2 % to 23.4 billion. Other Bets’ revenues grew 37% to 448 million with reported loss on operating income of 3.567 billion. Ruth Porat, CFO of Alphabet, pointed out that Other Bets have idiosyncrasies in the timing of revenue, expenses and CapEX due to different stages of development and business models, “You can expect that results for the combined Other Bets may be uneven in the near term, so it's likely to be more instructive to look at them on an annual or rolling 12-month basis to assess their trajectory.”
Alphabet’s CFO said that revenues were driven primarily by mobile research, YouTube and programmatic advertising. Increasing use of mobile search i.e. online shopping during the holidays boosted the Websites’ revenue growth of 20% YoY. Based on Q4 Google Segment Summary, 90% of Google’s revenue comes from advertising with a year-over-year growth of 17%. Video Advertising significantly supported YouTube revenue. Network Members’ websites revenue up 7% YoY to 4.1 billion. Aggregate paid clicks rose 31% YoY and paid clicks on Google website jumped for 40%. Meanwhile, aggregate Cost per Click (CPC) was down 13% YoY. ‘The movement in Google Sites paid clicks and CPCs primarily reflects the continued growth in YouTube TrueView’, said the CFO.
Sundar Pichai, CEO of the company, announced that Gmail now has over 1 billion active monthly users, joining Search, Android, Maps, Chrome, YouTube, and Google Play. ‘All continued to grow rapidly on mobile’.
He also announced that the company would continue to invest in moonshots, ‘The next wave will be powered by big advances in machine learning and artificial intelligence, an area where we believe we lead the industry.’