Alphabet, Google’s parent company, released Q3 results today showing its revenue and operating income growing from the prior year but net income falling.
Analysts are blaming Google’s investment in cloud computing for the drop in net income. The company has been building data centres, buying equipment, and hiring various staff including salespeople and engineers to support the cloud unit which competes against powerhouses Microsoft, Amazon, and IBM.
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The company’s net income came in at US$7.1 billion, $10.21 a share compared to the prior year of US$9.1 billion. Analysts expected US$12.35 a share.
Alphabet’s revenue came in at US$40.5 billion, a growth of 20 per cent to the prior year and its operating income was at US$9.1 billion, a 23 per cent increase from Q3 in 2018.
Sundar Pichai, CEO at Google said, “I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud.
“We’re focused on providing the most helpful services to our users and partners, and we see many opportunities ahead.”
Ruth Porat, CFO of Alphabet and Google said, “Our businesses delivered another quarter of strong performance, with revenues of US$40.5 billion, up 20 per cent versus the third quarter of 2018 and up 22 per cent on a constant currency basis.
“We continue to invest thoughtfully in talent and infrastructure to support our growth, particularly in newer areas like cloud and machine learning.”