Google Making Changes to Core Businesses

For the three months ended March 31, Alphabet reported revenues of US$24.8 billion - up 22% year-on-year and 24% on a constant currency basis. That beat Wall Street expectations of $24.22 billion in revenue and EPS of $7.39.

Shares were up 4 percent in after-hours trading; shares are up more than 20 percent in the past year.

What is interesting is that much of this success remains within Google's online advertising revenues, from both search ads and YouTube.

GAAP income from the quarter was reported at $5.4 billion, or $7.85 per share, up from the $4.2 billion, or $6.12 per share, the company reported for the same period of past year. Investors will have to wait until the company's next quarterly earnings report to see if the changes will impact Alphabet's bottom line.

Google's other bet revenues were just $244 million, up from $165 million from a year ago.

But Alphabet is also benefiting from other ventures including its growing cloud business and revenue from its hardware (i.e Pixel smartphone) and Google Play Store. In 2016, with Pichai at the helm, Google's sales experienced a 22.5 percent rise.

The company's operating income climbed from $5.34 billion to $6.57 billion.

Pichai's base pay was $650,000 and in addition to that, he received stock award for $198.7 million, taking the total compensation to an enviable number.

The two companies accounted for 99% of the industry growth in digital advertising in 2016, Pivotal Research said in a report this week, demonstrating market power that some advertisers complain amounts to a duopoly.

In his 2016 shareholders letter, Google co-founder Larry Page highlighted Alphabet's various "Other Bets" projects and noted how the creation of Alphabet as a new holding company "has helped entrepreneurs build and run companies with the autonomy and speed they need". Paid clicks, where an advertiser pays only if a user clicks on ads, rose 44 per cent. Analysts on average had expected a rise of 29.7 per cent, according to FactSet StreetAccount.

Speaking on the company's Q1 earnings call, chief finance officer Ruth Porat said that Alphabet's ad revenues were driven by mobile search, with ongoing strength in YouTube and programmatic advertising.

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