Posted on April 24, 2018 by staff

Google owner sees profits increase 73 per cent


Google parent company Alphabet has seen profits rise almost 73 per cent in the first quarter of 2018.

This is thanks to a jump in revenues from internet advertising, despite fears that rising costs and regulation could hamper the search giant’s performance.

The net income for the California-based company’s first-quarter beat analyst expectations, hitting $9.4bn (£6.7bn) from $5.4bn a year earlier. Revenue also increased 26 per cent to $31.1bn from $24.8bn.

In the first three months of the year the search engine had a $3bn boost thanks to a change in accounting rules, alongside a $1.1bn uplift from currency exchange movements.

Despite this it has attributed much of its growth to a hike in pricing for online ads on its Google search engine, YouTube video service and partner apps and websites.

Ivan Feinseth, an analyst at Tigress Financial Partners, told the BBC: “The strong economy has companies spending more on advertising and we have an ongoing migration from traditional types of media advertising to greater online and social media-based advertising.”

Alphabet has seen a decline in profit margins in recent quarters as it focuses on reinvesting in areas of its business such as cloud computing and hardware.

The firm also tripled its capital spending to $7.7bn during the first quarter and has seen shares fluctuate following pressure from regulators to change its business practices.

With the European Union’s new General Data Protection Regulation (GDPR) due to come in on 25 May, investors have shown concern, with some analysts believing some users may begin to opt out of receiving personalised ads online.

“GDPR is a fairly new public topic, but for us it is not new – we started working on it 18 months ago,” said Google boss Sundar Pichai.

“We are working very closely with our publishers and our partners… It is a big effort, we are very committed to it and to getting it right.”