Google parent company Alphabet has posted its fourth quarter 2018 and full fiscal year earnings, noting continued growth for the company and beating out many analysts' estimates. Figures for the company year-over-year are up almost across the board, with the notable exception of Google's traffic acquisition costs (TAC) and operating losses for Google's "Other bets" category. The latter figure rose to $1.328 billion from last year's $748 million while TAC rose by a percent to $7.436 billion.
Despite Google's operating losses in the category for its side businesses such as Waymo and Verily, the company did manage to make gains in terms of total revenue flow — moving up to $154 million from $131 million the previous year. Losses in the category aren't uncommon since the other bets category is understood to be an umbrella for Alphabet's long-shot, experimental projects.
Revenue from Alphabet Inc.'s largest source of income, Google's advertising division, bumped its figures by 19.86-percent to land at $32.635 billion for the three month period. Revenue from its other properties raked in $27.022 billion. Alphabet's overall revenue rose to $136.8 billion, a 32-percent increase over last year.
While operating income was up from $7.664 billion to $8.203 billion year-over-year for the three months ending December 31, 2018, the operating margin also fell three-percent to 21-percent. Annual revenue growth shrank by two-percent for the period compared to last year but revenue rose by 21.5-percent moving from $32.323 billion to $39.276 billion.
Net income for the period came in at $8.948 billion compared to 2017's over $3 billion loss for the same period.
Spurred by a lower effective tax rate
Alphabet and Google, in particular, had a rollercoaster year in 2018 in terms of publicity. The company faced a number of controversies ranging from privacy breaches that went unreported to an uproar surrounding the clarity of its location tracking. Among the more damaging of those was its work on a China-specific search engine which ultimately caused questions to be raised by the US government.
The company did manage to weather the bulk of those difficulties and to institute changes in pursuit of a better path forward. Each of those likely had some impact on its performance for 2018 but the company's effective tax rate for the final quarter may have contributed more to its growth than its crisis response.
Compared to the third quarter of 2018, the company's tax rate for the most recent quarter was up by around 2-percent — landing at an effective rate of eleven-percent. The rate for both the third and fourth quarters did drop annually, however. In the third quarter, the company's rate fell from 16-percent to nine-percent while the fourth quarter year-over-year change went from 138-percent in 2017 to just eleven-percent.
The steep drop in taxes likely helped Alphabet continue growing not just in terms of revenue and profitability but also in terms of its overall headcount too. The company employed approximately 94,372 people at the end of the third quarter, rising to 98,771 by the end of the fourth. That's roughly a 4.66-percent increase over the last quarter and 23.29-percent increase from last year for the same period. The year-over-year growth rate in the third quarter fell in at around 20.83-percent.