Alphabet's 'Other Bets' post operating loss of $859M as Google drives revenue jump

alphabet second quarter 2016 earnings android lollipop at google feat
Alphabet Inc. — the parent company that oversees Google and “Other Bets,” such as X, Calico, and Nest — has announced earnings for the second quarter of 2016 that beat analysts’ expectations. Alphabet is reporting $21.5 billion in revenue for the quarter — that’s a 21 percent increase from the same period a year earlier.

Unsurprisingly, 99 percent — or $21.3 billion — of that revenue comes from Google.

This is the third earnings report from Google that has been reported under the relatively new parent company, Alphabet. Alphabet’s Other Bets only brought in $185 million, which is up from $74 million this time last year — but its operating loss jumped from $660 million to $859 million. These moonshot projects clearly aren’t generating revenue, but they’re meant to be “bets,” so it’s likely they won’t provide any significant profit any time soon. These companies also include Fiber, the driverless car project, and Verily.

“Let me again emphasize that the majority of these efforts are prerevenue, we continue to invest across these opportunities, and are doing so in a disciplined way,” Alphabet’s CFO, Ruth Porat, said in an earnings call. “We think it remains most instructive to look at them over a longer time horizon, because, as you have seen, quarterly revenue and expenses can be lumpy for three primary reasons: first, they are early stage; second, they represent an aggregation of businesses operating in different industries; and third, they may be impacted by one-time items, like partnership deals.”

Earlier this year, Alphabet put one of these bets — robotics firm Boston Dynamics — for sale.

Interestingly, the company says it now employs 9,427 more people than last quarter, bringing its total headcount to 66,575.

While most of this is good news for the parent company, there are some worrying signs. For example, the report mentions that Google’s cost per click went down 7 percent in the second quarter compared to the same period a year ago.


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