Alphabet Q1 2018 earnings: $31 billion revenue leads to $7 billion income

Alphabet, the parent company comprised of Google and various other subsidiaries, has just released its Q1 2018 earnings. The top-level numbers are strong: $31.1 billion in revenue, leading to $7 billion in operating income for the three months. Those numbers are increases of 26% and 22% over the previous year, respectively, and earnings per share were $13.53. In short, Alphabet continues to have amazingly large growth for a company of its size.

Alphabet's stock quickly spiked after the earnings release, but quickly leveled off to about $1070, just shy of where it last closed before the earnings release.

Unsurprisingly, Google's advertising business is roughly 85% of its revenue.

The "Google" part of the business obviously continues to be the primary driver of revenue and income for the company, with the "Other bets" segment — a combination of small, speculative endeavors — delivering a relatively tiny amount of revenue and another quarterly loss. Other bets had revenues of just $150 million, leading to a $571 million loss — though that was an improvement of $132 million from last year. Google's "other revenues," which includes segments like its hardware business, the Play Store and Nest, had $4.35 billion in revenue, up over $1 billion from Q1 2017.

Advertising, primarily from Google's properties, is the most substantial portion of Alphabet's earnings, making up $26.6 billion of the revenue. Traffic acquisition costs (TAC, what Google pays to gain traffic to ads) went up once again, by 2 percentage points, up to 24% of advertising revenues. Paid clicks were up by 59%, and the cost-per-click was down 7% from a year earlier. This continues to be the trend for Google (if not the entire online advertising system): paid advertising clicks keep going up, but the cost for each is going down.

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Alphabet's cash position hasn't changed much, now standing at $102 billion, and its effective tax rate was 11% — though that number is mostly lower due to a change in accounting standards. Outside of the money, Alphabet now has over 85,000 employees worldwide, which is a considerable jump of 11,000 from Q1 2017 — 2,000 of those new employees came from HTC at the start of the year.

The Q1 2018 earnings release conference call can be listened to below.

Andrew Martonik

Andrew was an Executive Editor, U.S. at Android Central between 2012 and 2020.