Daily Management Review

Alphabet's Numbers


The new Holding Alphabet, which includes Google from October 2, 2015, has unveiled the financial results. The corporation’s income, in which, in addition to Google, entered Google Ventures, Google Capital, Google X, Calico, Fiver, Life Sciences and Nest, were higher than analysts had forecasted.

Alphabet Group reported on the results of the work in the III quarter of this year. This is the first Alphabet’s financial report, which also was the last for Google as an independent company. Under the new concept, Google will become in a separate unit responsible for the main search business, yet for the time being, Google will continue to exist as a subsidiary.

The holding includes the search engine Google, innovative laboratory Google X, the investment division Ventures and Capital, as well as the company Calico, which deals with life extension. The new scheme would allow Google to show real progress in the market, which are now eroding by remaining loss-making developments, according to Alphabet’s owners.

In III quarter, closed September 30, 2015, Alphabet had revenues of US $ 18.68 billion, which is 13% higher than the value of the previous year. Net income for the same period rose to $ 3.98 billion from $ 2.7 billion.

Excluding payments to partners, Alphabet revenue on an annualized basis increased by 15%, reaching $ 15.1 billion, while analysts surveyed by Bloomberg had expected it to be $ 15 billion. Adjusted earnings were $ 7.35, exceeding the average analytical forecast of $ 7.2.

After the publication of the quarterly report, which was above Wall Street's expectations, Alphabet share price (continue to trade under the ticker symbol GOOG) rose to $ 742.8 in the extended session on the Nasdaq. Over the past year securities rose by 23%.

In the III quarter, Google's revenue rose 13% to $ 18.68 billion, exceeding last year's figures by 21% and the forecasts of analysts, assessed revenues of $ 18.53 billion.

Earnings per share were $ 7.35. Analysts polled by FactSet, on average, had forecasted an adjusted profit of $ 7.20 a share on revenue excluding traffic at $ 15.04 billion.

Operating profit was $ 4.7 billion (GAAP) and $ 6.1 billion (non-GAAP), or $ 5.73 and $ 7.35 per share, respectively. Expenses increased by 9.1% to $ 13.97 billion, accounting for 74.7% of revenues.

The main income of about $ 16.78 billion was obtained from advertising web traffic. The total number of paid clicks in Google search engine rose to 23%, on all websites Google - 35%. The cost click (CPC) fell by 5%, on the websites of Google - 11%.

Current head of Google Sundar Pichai said the main increase in advertising on search traffic came from mobile phones, which now already globally exceeded the search traffic from desktops.

- The results of the III quarter showed Google’s strong business perspective, especially in the field of mobile search. We offer six products, which are now used by more than 1 billion users in the world. We are happy with the opportunities offered in the future to Google and Alphabet", - said Chief Financial Officer Holding Ruth Porat.

After the announcement of the financial result, Alphabet aired the first class C shares buyback total of $ 5,099,019 513.59. Why is the exact number? Author Forbes George Anders noted that the sum was formed from the result of the square root of 26, up to 12 decimal places. 26 letters in the English alphabet, in which honor the holding Alphabet is named.

Google uses a mathematical reference to its financial activities not the first time. For example, during the IPO in 2004, the company decided to place 14,142,135 shares (the square root of 2 ~ equals 1.4142135) on the stock exchange.

Shares of the holding company, reaching $ 741 per security, made the capitalization of the company closer to $ 500 billion, which puts it in second place after Apple in the rating of S&P 500.

It is only a small part of the money, which Alphabet has accumulated on the balance. It should, however, be taken into account that most of the assets of the company is located in offshores as Alphabet does not want to pay taxes in America.

source: forbes.com