All Businesses Google’s Parent Company Owns And How They Contribute To Revenue
Alphabet has more than a dozen different businesses, but it’s still an advertising company through-and-through, as this chart shows.
The company reported fourth quarter earnings on Thursday, which revealed that it still makes 84 percent of its revenue from advertising, with 14.5 percent coming from the likes of its cloud unit and hardware, and 1.2 percent coming from its so-called Other Bets, like its Fiber internet service and Nest smart-home products.
Alphabet’s stock fell after earnings, in part because investors are worried about the rising traffic acquisition costs and smaller margins at Google as more clicks have shifted to mobile and programmatic advertising.
CFO Ruth Porat tried to assure Wall Street that Alphabet is focused on building its “second wave of growth” through the cloud, hardware like its new smart speakers and Pixel phones, and YouTube. For the first time, Google provided some color on its cloud unit, saying that it now brings in $1 billion per quarter. That’s perhaps more than expected, but still a long way from achieving the lofty goal that cloud guru Urs Hölzle stated several years back of turning Google into a cloud company by 2020.
Meanwhile, Porat said that Alphabet remains excited about its long-term bets like self-driving cars. Alphabet reeled in $1.2 billion from its “Other Bets” this year, while cutting its operating losses to $3.4 billion, down from $4.6 billion in 2016.
That revenue growth was primarily driven by Nest, Fiber, and Verily, Porat said, adding that Alphabet was able to drop its capex to $570 million from $1.4 billion in 2016 by reducing its investment in Fiber, the high-speed internet service that required it to dig up gardens.