Alphabet CFO: Google for Work, cloud helped Q3 sales; will break out more results next quarter

Google's CFO also promised the Internet giant would start breaking out more results by unit -- versus just advertising and "other" -- as soon as the next quarter.

Google's cash cows have traditionally been search and advertising, but its enterprise products are starting to pull their weight.

Ruth Porat, chief financial officer for Google and its parent company Alphabet, elaborated to shareholders during the quarterly call about some of the major contributors to the Internet giant's strong Q3 report published on Thursday.

Consumer-focused products such as YouTube, Google Play and mobile search and YouTube were all cited as top contributors.

But Porat also underscored Google for Work and Google Cloud Platform, explaining a key difference between 2014 and 2015.

"Year-over-year growth was driven by Google for Work, including Cloud, as well as continued strong growth in Play," Porat said. "Both were offset by the absence of revenues included in Q3 14 from the licensing agreement and lower hardware sales as we reach the end of lifecycles for certain Chromecast devices."

Google CEO Sundar Pichai later concurred on the potential and opportunity for Google's cloud suite, asserting that soon every "business in the world is going to run in the cloud."

Porat also promised that the Internet giant would start disclosing sales results by unit -- versus just advertising and "other" -- as soon as the next quarter.

Porat explained:

Starting in the fourth quarter with our shift to segment reporting, we intend to provide additional details for Google on one hand and all the other Alphabet businesses on the other hand. We refer to those other Alphabet businesses as "Other Bets." We expect Other Bets to include, among others, energy, Nest, life sciences, and investment arms, which is where driverless cars and certain other incubation efforts reside.

Specifically, we intend to disclose -- for both Google and Other Bets -- revenues, profitability and CapEx. By doing this, we expect that you will be better able to understand how we manage the businesses, including the pace in allocation of our investments. As Larry said in his CEO letter announcing Alphabet, we are focused on rigorously managing capital allocation and working to make sure each business is executing well.

In Q3, total advertising revenue alone accounted for $16.78 billion over the three-month period, while revenue from other Google units contributed $1.894 billion.

Overall, Alphabet posted revenue of $18.7 billion, up 13 percent year-over-year.

It's not clear yet if Google will single out its enterprise portfolio on the balance sheet in the way Amazon started doing with its thriving cloud department, Amazon Web Services, earlier this year.

The approach clearly worked for Amazon, also impressing investors and analysts on Thursday with AWS profits that rang up to nearly as much as Amazon's North America e-commerce business.

It is highly unlikely that Alphabet would break out of the gates with cloud profits matching its core search business.

Nevertheless, as company executives continue to defend their restructuring plan and rationale to Wall Street, additional strong streams of revenue wouldn't hurt that defense either.

Newsletters

You have been successfully signed up. To sign up for more newsletters or to manage your account, visit the Newsletter Subscription Center.
See All
See All