Categories AlphaGraphs, Analysis, Technology

Google: A look at the search giant’s revenue streams

Google, a subsidiary of Alphabet Inc. (NYSE: GOOGL), has faced flak numerous times on how it generates advertising revenue and the company, along with its peers, now faces the possibility of strict regulations. Let’s take a look at how Google earns its revenue and how it has been trending thus far.

The majority of Google’s revenues come from advertising generated through Google properties such as search, Gmail, Google Maps, Google Play and YouTube and through Google Network Members’ properties in AdMob, AdSense and Google Ad Manager. In 2018, Google’s ad revenues made up 85% of parent Alphabet’s total revenue.

Google also earns revenue outside advertising through apps, in-app purchases and digital content in the Google Play store and from Google Cloud, hardware and YouTube subscriptions. These are classified as other revenues.

For the first quarter of 2019, Google posted advertising revenues of $30.7 billion, which was up 15% year-over-year but down 6% sequentially. Over the trailing five quarters, growth in advertising revenue stayed in the low to mid-single digit range before seeing a double-digit climb in Q4 2018. This was followed by a drop in the most recent quarter.

Google's advertising revenue trend

Google faces tough competition from Facebook (NYSE: FB) and Amazon (NYSE: AMZN) in the digital advertising space. A report from eMarketer states that total digital ad spending in the US will grow 19% to $129.3 billion in 2019.

The report also indicates that the combined market share of Google and Facebook is expected to drop despite a growth in revenue for both companies. Amazon’s ad business in the US is estimated to grow over 50% in 2019 while its digital ad market share is projected to grow to 8.8% from 6.8% in 2018.

Google has been trying to diversify its revenue base beyond advertising and has been focusing on its other revenues category as part of these efforts. This segment, which includes Google Cloud, posted steady sequential revenue growth over the past three quarters until the most recent quarter, where it saw a 15% dip.

Google Other Revenues quarterly growth trend

Google’s cloud business has significant potential to drive revenue growth and the company is taking measures to ramp up this business. This report from ZDNet suggests that Google Cloud and Microsoft Azure are likely to take market share away from Amazon Web Services (AWS) in 2019 and 2020. Although Amazon is moving into Google’s territory in the digital advertising space, the search giant is giving the online retailer tough competition in the cloud space.

Overall, Google enjoys a strong footing in advertising and has good potential to drive revenues in cloud going forward.

Browse through our earnings calendar and get all scheduled earnings announcements, analyst/investor conference and much more!

Most Popular

GameStop (GME) Earnings: Q1 loss narrows on 25% sales growth

Video game retailer GameStop Corp. (NYSE: GME), which has become the talk of the town after the unprecedented stock rally in recent weeks, reported a narrower loss for the first

Should you invest in Steel Dynamics (STLD) stock after 78% rally?

The steel industry managed to shrug off the pandemic blues earlier than expected as the recovery in industrial activity pushed up demand. With the vaccination drive and the government’s aggressive

Campbell Soup (CPB) Q3 Earnings: Key financials and quarterly highlights

Campbell Soup Company (NYSE: CPB) reported third-quarter 2021 earnings results today. Net sales decreased 11% year-over-year to $1.98 billion, as a result of lapping the demand surge at the onset

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top