Alphabet (GOOG) (GOOGL) Misses Q4 EPS by 26c, Revs Beat
Alphabet (NASDAQ: GOOG) reported Q4 EPS of $9.70, $0.26 worse than the analyst estimate of $9.96. Revenue for the quarter came in at $31.91 billion versus the consensus estimate of $31.85 billion.
"Our business is driving great growth, with 2017 revenues of $110.9 billion, up 23% year on year, and fourth quarter revenues of $32.3 billion, up 24% year on year. Our full year operating income growth continues to underscore our core strength, and on top of this, we continue to make substantial investments for the long-term in exciting new businesses," said Ruth Porat, CFO of Alphabet.
Alphabet Announces Fourth Quarter and Fiscal Year 2017 Results
MOUNTAIN VIEW, Calif. – February 1, 2018 – Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter and fiscal year ended December 31, 2017.
"Our business is driving great growth, with 2017 revenues of $110.9 billion, up 23% year on year, and fourth quarter revenues of $32.3 billion, up 24% year on year. Our full year operating income growth continues to underscore our core strength, and on top of this, we continue to make substantial investments for the long-term in exciting new businesses," said Ruth Porat, CFO of Alphabet.
Q4 2017 financial highlights
In order to facilitate comparison of current quarter performance to prior periods, this summary table highlights the impact of the U.S. Tax Cuts and Jobs Act (Tax Act):
Q4 2017 summary results reflecting the impact of the Tax Act | |||||||
Including (GAAP) . | Excluding | ||||||
Revenues | $32,323 | $32,323 | |||||
Operating income | $7,664 | $7,664 | |||||
Provision for income taxes | $11,038 | $1,181 | |||||
Net (loss) income | ($3,020 | ) | $6,837 | ||||
Effective tax rate | 138 | % | 15 | % | |||
Diluted EPS | ($4.35 | ) | $9.70 | ||||
The following summarizes our consolidated financial results for the quarters ended December 31, 2016 and 2017 (in millions, except for per share information, effective tax rate, and number of employees; unaudited), reported on a GAAP basis including the impact of the Tax Act (except for constant currency revenues information):
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2017 | ||||||
Revenues | $26,064 | $32,323 | |||||
Increase in revenues year over year | 22 | % | 24 | % | |||
Increase in constant currency revenues year over year | 24 | % | 24 | % | |||
Operating income | $6,639 | $7,664 | |||||
Operating margin | 25 | % | 24 | % | |||
Net income (loss) | $5,333 | ($3,020 | ) | ||||
Diluted EPS | $7.56 | ($4.35 | ) | ||||
Diluted shares (in thousands) | 700,221 | 694,604 | |||||
Effective tax rate | 22 | % | 138 | % | |||
Number of employees | 72,053 | 80,110 | |||||
Q4 2017 supplemental information
Segment revenues and operating results (in millions; unaudited):
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2017 | ||||||
Google properties revenues | $17,968 | $22,237 | |||||
Google Network Members' properties revenues | 4,431 | 4,990 | |||||
Google advertising revenues | 22,399 | 27,227 | |||||
Google other revenues | 3,403 | 4,687 | |||||
Google segment revenues | $25,802 | $31,914 | |||||
Other Bets revenues | $262 | $409 | |||||
Google operating income | $7,883 | $8,763 | |||||
Other Bets operating loss | ($1,088 | ) | ($916 | ) | |||
Traffic acquisition costs (TAC) to Google Network Members and distribution partners (in millions; unaudited):
Three Months Ended December 31, 2016 | Three Months Ended December 31, 2017 | ||||||
TAC to Google Network Members | $3,082 | $3,674 | |||||
TAC to Google Network Members as % of Google Network Members' properties revenues | 70 | % | 74 | % | |||
TAC to distribution partners | $1,766 | $2,776 | |||||
TAC to distribution partners as % of Google properties revenues | 10 | % | 12 | % | |||
Total TAC | $4,848 | $6,450 | |||||
Total TAC as % of Google advertising revenues | 22 | % | 24 | % | |||
Paid clicks and cost-per-click information (unaudited):
Change from Q4 2016 to Q4 2017 (YoY) | Change from Q3 2017 to Q4 2017 (QoQ) | ||||
Aggregate paid clicks | 43 | % | 18 | % | |
Paid clicks on Google properties | 48 | % | 19 | % | |
Paid clicks on Google Network Members' properties | 13 | % | 9 | % | |
Aggregate cost-per-click | (14 | )% | (6 | )% | |
Cost-per-click on Google properties | (16 | )% | (7 | )% | |
Cost-per-click on Google Network Members' properties | (4 | )% | 1 | % | |
Impact of the Tax Act
The Tax Act was enacted on December 22, 2017 and resulted in additional tax expense of $9.9 billion in the fourth quarter of 2017 primarily due to the one-time transition tax on accumulated foreign subsidiary earnings and deferred tax impacts.
Other announcements
On January 31, 2018, the Board of Directors (Board) of Alphabet authorized the company to repurchase up to an additional $8,589,869,056 of its Class C capital stock. The repurchase is expected to be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans.
On January 31, 2018, the Board appointed John L. Hennessy to serve as Chair of Alphabet’s Board. Mr. Hennessy has served as a member of the Board since April 2004 and Lead Independent Director since April 2007.
For earnings history and earnings-related data on Alphabet (GOOG) click here.