Google reports 28% profit increase boosted by ad sales

Google appeared unmarred, financially, from the fallout around ads on YouTube appearing next to offensive and hate-filled content.

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.

Google parent Alphabet (Xetra: ABEA.DE – news) on Thursday reported strong gains in quarterly results, beating most market forecast despite rising costs for its “moonshot” efforts. Growth was led by ad revenues, which increased 18.8% to $21.4 billion.

Analysts had been modeling revenue of $19.78 billion and EPS of 7.38. “We’ve been thoughtful about how we build out the entire go-to-market organization”. “We have wanted to see Google be more than just an advertising company”, he said.

But Google is investing heavily.

Google’s revenue for the quarter has gone up by 22.2 percent to reach $24.75 billion.

Chief executive Satya Nadella praised the performance of Microsoft’s cloud services – which he prioritised when taking over in 2014 over some of the company’s hardware products, including smartphones.

Alphabet added around 10,000 more employees since this time a year ago, so the increases haven’t seem to come as a result of cutting things back. Certain advertisers have curtailed their spending until they are convinced Google can prevent their brands from appearing next to extremist clips promoting hate and violence.

Still, the lion’s share of Alphabet’s revenue comes from ads and that’s not going to change any time soon.

The shares of Alphabet (NASDAQ:GOOG) (NASDAQ: GOOGL), the parent holding company of Google, are trading higher during the extended trading hours after the reporting outstanding financial results for the first quarter. This represents about 10.1% upside potential over the tech giant’s last closing price.

The operating loss for the “Other Bets” business deepened to $855 million from $774 million a year earlier. Other bets includes Waymo, a self-driving auto division, and Verily life sciences division.

Its shares were 4% higher at just under $930 per share in after-hours trading in NY last night and have risen by more than 20% over the past year.