Alphabet, the parent company of Google, announced its business report for the third quarter of fiscal year 2019 on Wednesday evening. The company reported revenue of $40.499 billion in the third quarter, up 20% from $33.74 billion in the same period last year. Net profit was $7.068 billion, down from $9.192 billion in the same period last year. Advertising revenue still accounted for the largest share of the business's revenue, reaching $33.92 billion, or 83.7 percent.
By business, Alphabet's revenue streams are divided into Google and other businesses. Advertising revenue, which includes web revenue (generated by Google's own site) and web revenue (generated by Google's partner sites through the AdSense program), totaled $33.92 billion. Other revenue was $6.428 billion, up from $4.640 billion a year earlier. Other businesses reported third-quarter revenue of $155 million, up from $146 million a year earlier.Alphabet's third-quarter operating profit was $9.177bn, or 23 per cent of revenue, or operating margin. That compares with Alphabet's operating profit of $8.625bn, or 26 per cent of revenues, in the same period last year.
Regulatory and privacy pressures are growing for Alphabet's top-grossing advertising business, but demand for the company's search, video and online display ads remains strong. Google's chief executive, Sundar Pichai, says that half of advertisers' search spending now comes from automated bidding.
Beyond its main Google digital advertising business, Alphabet is looking for new sources of revenue growth, and the cloud may be its biggest opportunity. Google, the world's largest online search service provider, has been building data centers, buying equipment and hiring salespeople to support its cloud business. "We've evolved from a company that helps people find answers to their problems to a company that helps people get things done," pichai said on a conference call with analysts.
In terms of the cloud business, Alphabet faces two powerful competitors, Microsoft Azure and amazon cloud services AWS. The question of how much money Google has invested in the cloud business, whether the cost is still increasing and whether the cloud business can continue to grow cannot be ignored.
