Alphabet Inc, the corporate parent of Google, on Monday reported first-quarter sales and profit that topped analyst forecasts, thanks to strong ad sales and a change in accounting for investments in startups, Reuters reports.
Net income surged 73 percent from a year earlier to US$9.4 billion, or US$13.33 per share, marking the strongest quarterly growth in more than eight years.
About US$3.40 of the earnings per share were attributable to a new accounting method for unrealized gains in Alphabet’s investments in startups such as Uber Technologies, according to the report.
Worldwide sales increased to US$31.1 billion in the quarter, above the average analysts’ estimate of US$30.3 billion.
However, operating income margins dropped to 22 percent from 27 percent a year ago. The decline was attributed to a deal in Taiwan where Alphabet had acquired 2,000 employees from HTC Corp.
Revenue from ads sold by Google rose as advertisers pursued slots on its search engine, YouTube video service and millions of partner apps and websites.
Google also revealed that smart thermostat maker Nest generated about US$726 million in revenue in 2017.
Financial results for the Alphabet division had not been released since its acquisition in 2014, but they were provided to investors Monday as it integrates into the Google unit.
Revenue from Google’s mobile app store and growth priorities such as cloud computing services and consumer devices was US$4.4 billion in the first quarter.
Overall, the results eased concerns that investment in new ventures beyond its core search business was undermining Alphabet’s outlook, Reuters noted.
There also were no immediate signs that rising global privacy concerns would affect profits.
“Google continues to dominate both mobile and desktop search,” noted Ivan Feinseth, an analyst from Tigress Financial Partners.
Excluding the investment-related gains and other items, adjusted earnings were US$9.93 per share, topping the US$9.28 per share consensus.
Alphabet’s effective tax rate dropped to 11 percent from 20 percent a year earlier, according to the report.
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