×
You will be redirected back to your article in seconds

Alphabet Q4 Earnings Come in Below Expectations, Company Has $10 Billion Tax Charge

Google corporate parent Alphabet didn’t quite meet analyst expectations for its fiscal fourth quarter of 2017, leading investors to send the stock down as much as 6% in after-hours trading.

Alphabet generated revenue of $32.32 billion during the holiday quarter, compared to $26.06 billion during the same quarter in 2016. Alphabet’s adjusted net income for the quarter was $6.84 billion, compared to $5.33 billion during the same quarter the year before. This translated to diluted earnings of $9.70 per share, compared to earnings of $7.06 for Q4 of 2016.

Google’s revenue, minus its traffic acquisition costs — the money it has to pay other companies as referral fees to get users to its sites and products — was $25.87 billion. Analysts had expected this to come in at $26.23 billion, and earnings of $10.04 per share. However, Google’s traffic acquisition costs grew from 22% to 24% of its advertising revenue year-over-year — a key number that added to investors’ sour mood.

The company’s earnings are significantly impacted by the recently-passed tax bill. The company’s effective tax rate shot up from 22% to 138% for Q4 of 2017, thanks to a one-time charge of $9.9 billion for repatriating foreign earnings. Including this one-time charge, Alphabet actually lost $3 billion in Q4. That being said, Alphabet is going to be just fine under the new tax rules going forward: Without the one-time charge, the company’s effective tax rate would have actually declined to 15%.

Alphabet’s balance sheets show growing income from the company’s hardware business, which includes its Pixel phones as well as devices like the Google Home line of smart speakers. “Other revenues,” a category that includes both Google’s cloud business as well as its hardware revenue, grew to $4.69 billion, from $3.4 billion in Q4 of 2016.

“We are pleased about the momentum in our hardware business,” said Alphabet and Google CFO Ruth Porat during the company’s earnings call. Google CEO Sundar Pichai added that device shipments during the fourth quarter had more than doubled year-over-year, and that the company sold “tens of millions” of Chromecast and Google Home devices in 2017.

Executives also once again called out YouTube as a key contributor to Google advertising revenue. That’s despite a renewed backlash over inappropriate content and brand safety, which dogged the video service in late 2017. “There have been concerns, and we are working really hard to address them,” acknowledged Pichai in a reference to recent changes to YouTube’s advertising policies. “The feedback we have received from advertisers and creators so far has been really positive,” he said about these changes.

More Digital

  • The Frontier

    Conecta Fiction: Project Pitches Prizes Passed Out in Pamplona

    On Wednesday evening the Spanish city of Pamplona was overrun, not by bulls, but by hopeful TV creators who had spent the early week pitching their projects at Conecta Fiction, and who anxiously waited to find out the titles which would take home silverware. Meanwhile, “Monzón,” a Disney-Pampa-Incaa production portraying the tragic violence of Argentine [...]

  • YouTube logo

    Why Splitting Up YouTube Is a Terrible Idea

    Facing mounting pressure over failures to protect children from inappropriate content, Google is reportedly considering a number of changes to its video sharing site YouTube. The Wall Street Journal reported Wednesday that one of the ideas circulated internally was to effectively split up YouTube, and spin out all children’s content into the existing YouTube Kids [...]

  • Niantic's Harry Potter: Wizards Unite Game

    ‘Harry Potter: Wizards Unite’ to Launch This Week

    “Pokemon Go” maker Niantic is getting ready to launch its next big game: “Harry Potter: Wizards Unite” is set to launch in June 21, the company revealed in a tweet this week. The worldwide launch of Harry Potter: Wizards Unite begins this Friday, June 21! Keep your eyes peeled and wand ready for more information [...]

  • google podcast creator program

    Google, PRX Unveil Second Slate of Their Podcasts Creator Program (EXCLUSIVE)

    Roughly a year after first unveiling its podcasts creator program, Google is renewing its commitment to train budding podcasters. Together with public radio and podcast distributor PRX, Google has chosen 6 podcasters from around the world to participate in the next round of the creator program. The podcasts included in the second cohort are “37 [...]

  • Camila Cabello

    Camila Cabello Reveals Podcast Obsessions, Teases New Album at Cannes Lions

    Camila Cabello was the featured speaker at a Tuesday afternoon panel at Cannes Lions, the annual gathering of marketing, design and entertainment professionals in the south of France. Joined by Spotify chief content officer Dawn Ostroff, the talk, moderated by Variety editor Shirley Halperin, was centered around the theme of the golden age of sound [...]

  • Meg Whitman and Jeffrey Katzenberg

    Quibi Has Already Booked $100 Million in Ad Sales, Jeffrey Katzenberg and Meg Whitman Say

    Quibi, the ambitious short-form video venture from Jeffrey Katzenberg and CEO Meg Whitman, has sold $100 million in upfront ad inventory with six advertisers ahead of its April 2020 debut. Advertisers that have committed ad spending to Quibi include Google, Procter & Gamble, PepsiCo, Walmart, Progressive and AB InBev, according to the company. The $100 [...]

  • China's iQIYI Signs Content, Channel Pact

    China's iQIYI Signs Content, Channel Pact With Malaysia's Astro

    Astro Malaysia, Malaysia’s leading pay-TV operator, has struck a strategic agreement with Chinese streaming platform iQIYI. Astro obtains the exclusive rights to deliver iQIYI content on TV, on-demand and via OTT in Malaysia. It will launch the first iQIYI-branded channel comprising iQIYI’s extensive slate of original content from drama to variety shows and movies. Astro [...]

More From Our Brands

Access exclusive content