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Q2 financial reports from Alphabet show profits in ads, losses in ‘Other Bets’

While it’s no question that Alphabet has advertising in the bag, the company is hemorrhaging funds in a blanket category described as “Other Bets.”
By
July 28, 2016
alphabet

On the whole, Google’s parent company is on the rise. Alphabet is reporting a 21 percent revenue growth year on year, and most of that comes from the boons of advertising. While it’s no question that the information king has advertising in the bag, the company is nevertheless hemorrhaging funds in a blanket category described as “Other Bets.”

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So what exactly is Other Bets? Well, mostly these include moonshot projects, a number of initiatives that earned about $185 million over the course of the last quarter. However, in spite of these earnings, projects like self-driving cars and worldwide internet powered by balloons has cost the company a hefty $859 million.

Fortunately, it appears that Alphabet is able to neatly eat these costs thanks to their $7 billion advertising profits. It’s worth noting too that, even though Other Bets is still in the red, the category at large may eventually have a future as an asset rather than a liability.  Revenue on these projects increased by 150 percent even as losses grew by 30 percent.

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In conversations with investors, Alphabet officials are emphasizing long-term gains over short-term difficulties. The company is adamant about their belief that the future will be radically different than the present, so responsible decisions that are not immediately profitable must be made in the short term to successfully navigate the coming decades.