Alphabet’s earnings look better than ever thanks to a new accounting rule

Shares jumped more than 4.5% in after-hours trading. The reporting change required Google’s parent company to disclose all gains and losses to its bottom line from its equity investments, including its stake in Uber. The drop in its effective tax rate will help, too.

That was comfortably ahead of Wall Street expectations, with analysts having forecast earnings of US$9.28 and revenue of US$30.3bn. The investment gain amounted to $3.40 per share.

“The jump in profits is purely due to one-time items”, he said.

Google-owner Alphabet has unveiled strong first quarter results with profits leaping 73 per cent on the back of strong advertising sales.

Revenue growth year over year was 26 percent vs. 24 percent in Q1 2017.

There could also be similar legislation in the United States, especially after social media giant Facebook, Google’s main rival in online ad revenue, was questioned by Congress on how Cambridge Analytica, a British data analysis firm, was able to acquire data on unwitting Facebook users at a hearing this month.

“The strong economy has companies spending more on advertising”, said analyst Ivan Feinseth from Tigress Financial Partners. Politicians on both sides of the Atlantic have turned their attention to data privacy protections.

When RBC analyst Mark Mahaney asked him whether he thought the new rules would impact advertisers’ targeting abilities, Pichai emphasized the fact that it still makes most of its money from search advertising, where the effect of personalization is minimal. The information services provider reported $9.70 earnings per share (EPS) for the quarter, missing the consensus estimate of $10.12 by ($0.42).

The adoption of new accounting standards and shifts in the most important “click” metrics spurred a different kind of earnings report from Alphabet, even bigger, more subjective changes may be afoot. Morgan Stanley reissued an “overweight” rating and set a $1,215.00 target price (up previously from $1,210.00) on shares of Alphabet in a research report on Friday, January 26th.

Alphabet has increased spending on consumer products, cloud computing and YouTube content. Revenue from Google’s advertising business, which includes ads shown on Google search and commercials running before YouTube videos, increased 24 percent during the quarter. Of particular interest to Thurrott.com readers are the results for what the firm calls “Google’s other revenues”.

Raising “other bets” Revenues from its “other bets”, which include the self-driving vehicle unit Waymo and life sciences firm Verily, amounted to $150 million from $132 million.

Investors are counting on one other bet, the Waymo self-driving vehicles effort, to generate noteworthy revenue this year as it begins offering ride-hailing services. Analysts had estimated traffic costs of $6.03 billion. 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.