The Google mother alphabet can currently not quite keep up with the expectations set in it. Revenues did not develop as well as expected. First and foremost, the problem is that Google is still extremely dependent on the advertising business and customers are paying far less for a slot.
The clicks on ads marketed by Google have increased significantly in recent months. The problem, however, is that users interact more actively with advertisements, especially on YouTube and in the mobile space. And, generally speaking, real-life purchases are less likely to follow the clicks coming in from there, so that advertisers will pay less for the ads than for the ads on the classic search engine sites. While clicks rose 60 percent year-over-year, prices dropped an average of another 28 percent.
As a result, while Google continues to grow significantly, the growth curve is increasingly leveling off. After a sales increase of 26 percent in the previous quarter, the services operated by Google now only increased by 22 percent. Meanwhile, the dependency on third-party vendors who push Google users for and want to be paid for it of course increases. At the forefront is Apple with its iOS devices. Although these flush many users to Google search, this is also compensated with billions.
As a result, Alphabet, excluding remittances to such partners, generated $ 27.2 billion in revenue in the third quarter. Although this narrowly missed Wall Street’s $ 27.3 billion target, investors did not think that was a particularly good signal. At least the increased by about 37 percent to 9.19 billion dollars net profit should at least provide some rest here.
The fact that the bookkeeping department of the group is cleverly finding new ways of not having to pay too much money out of doing business to the state coffers should also have a moderating effect. Tax loopholes used to be the main source of revenue – but this area is coming under increasing pressure. Now, by cleverly investing in startups, it has managed to add $ 1 billion to profits, while spending has been booked so that the tax rate has continued to fall.