"Operating expenses - Total operating expenses increased 28% to $29.7 billion, driven significantly by a $3.5 billion charge for a European Commission fine and higher R&D expenses. Operating margin impact - Operating margin in Google Services declined year-over-year to 38.5% due to the EC fine and increased technical infrastructure costs. CFO Ashkenazi stated, "the significant increase in our investments in technical infrastructure will continue to put pressure on the P&L in the form of higher depreciation expenses and related data center operations costs such as energy.""
"Headwinds in advertising growth comparison - Management indicated, "year-over-year comparisons in advertising will be negatively impacted by the strong spend on U.S. elections in the fourth quarter of 2024, particularly on YouTube." Total revenue -- $102.3 billion, up 16% year-over-year or 15% in constant currency, marking Alphabet (NASDAQ:GOOGL)'s first-ever quarter above $100 billion. Operating income -- $31.2 billion, up 9% year-over-year; excluding the $3.5 billion EC fine, operating income rose 22% and operating margin reached 33.9%."
Total revenue reached $102.3 billion, up 16% year-over-year, marking Alphabet's first quarter above $100 billion. Operating income was $31.2 billion, up 9%, and rose 22% excluding a $3.5 billion European Commission fine, which also reduced Google Services operating margin to 38.5%. Net income increased 33% to $35.0 billion and EPS rose 35% to $2.87. Total operating expenses increased 28% to $29.7 billion driven by the EC fine and higher R&D. Significant investments in technical infrastructure will raise depreciation and data center energy and operations costs. Free cash flow was $24.5 billion for the quarter and $73.6 billion trailing twelve months. Year-over-year advertising comparisons face headwinds from heavy U.S. election spending in Q4 2024, especially on YouTube.
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