Alphabet pulled back the curtain just a bit on its some of its most secretive businesses, revealing huge, mounting losses in its non-Google businesses.
For the first time in its history, Google’s parent company revealed the sales and losses for its experimental and “moonshot” initiatives, including Google Fiber, Calico, Nest, Verily, Google Ventures, Google Capital and X.
Sales at those companies were paltry — just $448 million during 2015. Losses, by contrast, were enormous: $3.6 billion last year alone.
But by shedding light on its experimental businesses, and separating its “other bets” from its core Google brand, Alphabet showed just how well Google is performing. Google continues to grow strong, reporting much better-than-expected sales and profit for the fourth quarter.
As Google has poured earnings from its search business into its experimental endeavors, shareholders have lacked clarity about how search sales are translating into search profit — until now.
Alphabet briefly overtook Apple as the most valuable company on the stock market on Monday, and its shares were up as much as 8% in after hours trading.
Sales
Fourth quarter of 2014: $18.1 billion
Fourth quarter of 2015: $21.3 billion, up 18%
Alphabet posted record sales in the fourth quarter after growing at a tremendous, startup-like pace.
It now has six products with more than one billion customers, including Search, Maps, YouTube, Chrome, Android and Google Play. Gmail could soon be added to that list: It has 900 million customers.
Profit
2014: $4.7 billion
2015: $4.9 billion, up 4%
Alphabet’s profit took a hit from the company’s restructuring efforts during the final quarter of 2015. Without the restructuring, it would have reported earnings of $6 billion — and that includes the $3.6 billion loss from Alphabet’s “other bets.”
Growth in paid clicks
2014: 14%
2015: 31%
Google makes the bulk of its money when people click on ads served up on its website and partner sites. Those clicks grew way more than Wall Street analysts had forecast — they were expecting 22% growth.
Decline in cost per click
2014: -3%
2015: -5%
The amount that advertisers pay Google for each click has been on the decline for years. That’s happened as advertisers shift to mobile advertising, which tends to cost less than desktop ads.