Alphabet tops Q3 targets as sales climb 24 percent

The tech giant has rebounded from its profit slump last quarter.

Alphabet handily topped third quarter revenue and EPS estimates as sales surged 24 percent.

The tech giant reported a net income of $6.73 billion, with non-GAAP earnings were $9.57 per share on revenue of $27.8 billion, when including traffic acquisition costs (TAC). On average, Wall Street was looking for Q3 earnings of $8.83 per share with $27.2 billion in revenue.

Net revenue excluding TAC was expected to be at $21.95 billion. Alphabet delivered above target with $22.2 billion in revenue excluding TAC.

Google revenues, which include the company's enterprise cloud, software and data management products, attributed most of Q3 sales with $27.5 billion in revenue, up from $25.76 billion the previous quarter. Google's Other revenues were $3.4 billion, up from $2.43 billion a year ago, fueled by cloud, play and hardware.

Google's cost-per-click, which is how much it makes off each advertising click, decreased 21 percent year over year but remained almost flat quarter over quarter. The company's total advertising revenue was $24.1 billion.

In Alphabet's "moonshot" Other Bets category, which includes Waymo, Nest, Fiber, Alphabet's healthcare-driven initiatives and other speculative projects, the company posted revenue of $302 million, with operating losses increasing slightly to $812 million. Last quarter, losses in this category totaled $772 million.

"We had a terrific quarter, with revenues up 24 percent year on year, reflecting strength across Google and Other Bets," said Alphabet CFO Ruth Porat, in prepared remarks. "Our momentum is a result of investments over many years in fantastic people, products and partnerships."

On a call with analysts, Porat highlighted the recent announcement that Waymo plans to test its self-driving car technology on the icy roads of the greater Detroit region this winter. Google CEO Sundar Pichai took time to on the call to mention Google's progress with infusing artificial intelligence and machine learning across its portfolio.

"It's been particularly exciting to see our early bet on artificial intelligence pay off and go from a research project to something that can solve new problems for 1 billion people a day," Pichai said. "Even though we are in the early days of AI, we're already rethinking how to build products around machine learning. It's a new paradigm compared to mobile first software, and I'm thrilled how Google is leading the way."

Turning to Google Cloud, Pichai highlighted new customer acquisitions and partnerships. With YouTube, Pichai said the company is investing in new subscription based monetization models. In terms of hardware, Pichai outlined recent gains expected from its recently released product lineup. He said preorders of the latest Pixel are more than double what they were last year.

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