For the first time, Google has reported its earnings as multinational conglomerate Alphabet, which was established as Google’s parent company last year. Alphabet reported a hefty $21.33 billion in revenue and $8.67 in earnings per share in the fourth quarter of the 2015 fiscal year.
Google, which technically is now only one Alphabet’s many subsidiaries, was responsible for about 98 percent of the reported revenue, at $21.178 billion. Alphabet crushed the expectations of analysts, who predicted $20.77 billion in revenue and $8.09 in earnings per share.
Alphabet is now the most valuable company in the world with a stock-market valuation of $553 billion, surpassing, at least for the time being, Apple’s $538 billion market cap.
Although Alphabet is divided into several subsidiaries, its earnings are only split into two: Google, designed for products and services that garner profits, and “Other Bets,” the more experimental moonshot companies crafted to pursue the conglomerate’s alternative undertakings.
Alphabet succinctly defines the two categories as follows:
Google: “Search, Ads, Commerce, Maps, YouTube, Apps, Cloud, Android, Chrome, Google Play as well as hardware products we sell, such as Chromecast, Chromebooks, and Nexus.”
Other Bets: “Access/Google Fiber, Calico, Nest, Verily (formerly Google Life Sciences), GV (formerly Google Ventures), Google Capital, X (formerly [X]) and other initiatives.”
As should be expected from a series of ventures that are highly speculative, Alphabet’s Other Bets subsidiaries brought home a $3.6 billion operating loss last year, with $448 million reported in revenues. Most of that revenue is attributed to Nest, Fiber, and Verily.
Google, by contrast, owes its wealth largely to pay-per-click advertising. Although the amount such advertising generates per click is declining, the overall number of clicks is increasing considerably, more than compensating for that decline.
In “Other Revenues,” which includes the Google Play app store as well as cloud storage services, Google reported earnings of $2.1 billion, an increase of 24 percent year on year.
Maybe Biggie was wrong: “Mo money,” thus far, doesn’t seem to equate to “mo problems” for Alphabet.