Google's Parent Company Reports Strong Inaugural Earnings

Larry Page - H 2016
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Larry Page - H 2016

Alphabet reported fourth quarter revenue of $21.3 billion.

Alphabet, the newly formed parent company of Google, showed in its inaugural earnings report that pleasing Wall Street can be as easy as ABC. 

Alphabet reported that total fourth quarter revenue was up 18 percent year-over-year to $21.3 billion. Wall Street was expecting revenue of $20.8 billion. 

Alphabet also reported quarterly adjusted earnings of $8.67 per share, beating the anticipated adjusted EPS of $8.10.

The strong performance sent the the company's stock surging as high as 9 percent during after-hours trading on the Nasdaq. It was enough to give Alphabet the edge over Apple to become the world's most valuable public company. 

Google founders Larry Page and Sergey Brin announced the plan to reorganize as Alphabet in August last year. The move split Google's core businesses, including search, Android and YouTube, into a separate company from that of the longer-term projects referred to as "Other Bets" such as smart thermostat Nest, the self-driving car and the X lab. Sundar Pichai took over as CEO of Google while Page became CEO of Alphabet.

With its Feb. 1 fourth quarter earnings report, Alphabet broke out reporting for its two segments — Google and "Other Bets" — for the first time. 

For the year, Google had revenue of $74.5 billion and operating income of $23.4 billion.

Meanwhile, the "Other Bets" segment was a much smaller driver of revenue for Alphabet, bringing in $448 million for the full 2015 year. The segment, where Alphabet invests into products that are often not yet on the market, operated at a $3.57 billion loss for the year.  

Despite providing greater financial transparency under the Alphabet reorganization, Google still does not break out revenue for YouTube. Alphabet CFO Ruth Porat said during a conference call with investors that YouTube "continues to grow at a very significant rate" but declined to provide further details.  

Alphabet shares closed Monday up less than one percent to $750.07.