Alphabet reports a strong third quarter despite free-falling advertising values


Image Credits: Jeff Chiu / AP

Alphabet’s strategy of trying to stuff the difference between declining mobile advertising value with additional clicks appears to still be paying off as the company once again showed Wall Street that it can make a ton of money and continue to grow.

Alphabet (we’re just gonna call it what it is because we’re talking about the core business: Google) reported earnings of $9.06 per share on revenue of $22.4 billion. That’s another 20 percent gain compared to the same quarter a year ago. Wall Street was looking for earnings of $8.64 per share on revenue of $22.05 billion.

Google’s business was for some time called into question because the value of advertisements on mobile was not as high as on desktop — specifically desktop search — which was Google’s sweet spot. Indeed, Google’s cost-per-click, a key metric determining the value of an ad, fell another 11 percent year-over-year this quarter. But aggregate paid clicks increased 33 percent in the third quarter year-over-year, showing it’s still able to compensate for that decrease. In the last quarter, Google’s cost-per-click fell 7 percent compared to the second quarter in 2015, and cost-per-click was down 5 percent quarter-over-quarter.

Still, it’s going to remain a question mark for some time as its cost-per-click continues at a double-digit decline. Google has to get its ads on as many devices and in as many mediums as it possibly can — whether that’s through a voice-driven speaker, its own phone where it can control the experience or pushing its services across as many devices as it possibly can. Wall Street may tolerate that decline for the time being, but it’s going to have to taper off at some point if Google is going to show it’s going to be a strong core business.

For now, because the company’s strategy is working, and that last quarter the company showed it could continue to work, it looks like Wall Street is happy. The stock isn’t going ballistic — it’s up about 2 percent — but it’s not on a wild swing down right now, either. In addition, Google is also authorizing a roughly $7 billion share repurchase program, in another move that is going to return additional value to its overlords on Wall Street.

As the years have passed, Google has gone from one of the only online advertising juggernauts to going head-to-head with Facebook, whose advertising business is rapidly expanding and offering a good alternative to Google. Both perform really well at different parts of the marketing funnel — Facebook is great for brand awareness while Google is good for capturing purchase intent with search — but they’re increasingly competing with each other for advertising dollars.

And that’s also not to mention emerging platforms like Snapchat which, while it isn’t necessarily a threat to Google yet, represents a potential additional advertising platform that could suck away the dollars Google is hoping to acquire as it tries to further expand its advertising business. Snapchat’s valuation may reach as high as $35 billion in an upcoming IPO, and it previously projected it would hit $1 billion in revenue in 2017.

So while Alphabet has been trying to rapidly roll out new devices and markets, like Google Home and the Pixel, all eyes are still going to be on its advertising business for now — which is staggering. In fact, questions about the company’s advertising growth were at the time largely stamped out when it delivered a tremendous second quarter that showed that it could continue to grow that business.

[graphiq id=”gSkC7iDYvDD” title=”Alphabet Inc. (GOOGL) Quarterly Revenue Last 8 Quarters” width=”600″ height=”525″ url=”https://sw.graphiq.com/w/gSkC7iDYvDD” link=”http://listings.findthecompany.com/l/8520977/Alphabet-Inc-in-Mountain-View-CA” link_text=”FindTheCompany | Graphiq” frozen=”true”]

Okay! Back to Alphabet.

Earlier this month, Alphabet held an event where it unveiled its first phone, the Pixel, and an Amazon Echo-like device in Google Home. It’s also pushing its voice assistant, Google Assistant, hard across all its devices as it looks to get people closer and closer to using Google for mundane tasks. While not necessarily monetized, there’s plenty of opportunity to do so, and keeping users glued to their devices gives them more eyeballs that they could potentially monetize with ads.

But not everything is well within the Alphabet empire. The company’s “other bets” revenue increased only marginally from $141 million to $197 million while still losing nearly $1 billion. The loss declined year-over-year — from $980 million in the third quarter last year to $865 in the third quarter this year — but Alphabet, and in particular CFO Ruth Porat, have indicated that the company is going to be more judicious about its spending going forward.

In the past year, Alphabet shares have gone up by around 11 percent. That’s not quite the crazy performance of Facebook — which is seen to be a huge growth opportunity — which has grown around 24 percent. But Google is also worth around $550 billion, and even small-point swings represent an enormous shift in value for the company. At one point, even, Google surpassed Apple as the most valuable company in the world.

[graphiq id=”6URLAvHXIZT” title=”Alphabet Inc. (GOOGL) Stock Price – 1 Year” width=”600″ height=”463″ url=”https://sw.graphiq.com/w/6URLAvHXIZT” link=”http://stock-screener.findthecompany.com/l/3759/GOOGL” link_text=”FindTheCompany | Graphiq” frozen=”true”]

More TechCrunch

Jolla has taken the official wraps off the first version of its personal server-based AI assistant in the making. The reborn startup is building a privacy-focused AI device — aka…

Jolla debuts privacy-focused AI hardware

OpenAI is removing one of the voices used by ChatGPT after users found that it sounded similar to Scarlett Johansson, the company announced on Monday. The voice, called Sky, is…

OpenAI to remove ChatGPT’s Scarlett Johansson-like voice

Consumer demand for the latest AI technology is heating up. The launch of OpenAI’s latest flagship model, GPT-4o, has now driven the company’s biggest-ever spike in revenue on mobile, despite…

ChatGPT’s mobile app revenue saw biggest spike yet following GPT-4o launch

Dating app maker Bumble has acquired Geneva, an online platform built around forming real-world groups and clubs. The company said that the deal is designed to help it expand its…

Bumble buys community building app Geneva to expand further into friendships

CyberArk — one of the army of larger security companies founded out of Israel — is acquiring Venafi, a specialist in machine identity, for $1.54 billion. 

CyberArk snaps up Venafi for $1.54B to ramp up in machine-to-machine security

Founder-market fit is one of the most crucial factors in a startup’s success, and operators (someone involved in the day-to-day operations of a startup) turned founders have an almost unfair advantage…

OpenseedVC, which backs operators in Africa and Europe starting their companies, reaches first close of $10M fund

A Singapore High Court has effectively approved Pine Labs’ request to shift its operations to India.

Pine Labs gets Singapore court approval to shift base to India

The AI Safety Institute, a U.K. body that aims to assess and address risks in AI platforms, has said it will open a second location in San Francisco. 

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

24 hours ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

3 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

3 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake