Market Overview

Infographic: Google Diversifies With Growing Non-Ad Revenue

Infographic: Google Diversifies With Growing Non-Ad Revenue

Diversifying revenue as a risk mitigation strategy seems to be on the mind of Google parent Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG). The company is slowly and steadily growing revenue streams from sources other than its bread-and-butter search business, which primarily yields ad dollars. 

Google's 10-K filing for fiscal 2017 showed that the internet giant derived $95.38 billion of its total revenue of $110.855 billion from advertising, representing roughly 86 percent of the total.

Google's Other Revenue Sources 

Google's Other revenues and Other Bet revenues account for $14.28 billion and $1.203 billion, respectively, for a combined share of 14 percent.

Google posted year-over-year growth in Other revenue and Other Bet revenue of 41.6 percent and 49 percent, respectively, and both segments outperformed Ad revenue growth of 20.1 percent. 

Other revenue and Other Bet revenue comes from the following sources: 

  • Apps, in-app purchases and digital content in the Google Play store.
  • Google Cloud offerings.
  • Hardware.
  • Other miscellaneous products and services.

The share of non-advertising revenue increased from about 3.1 percent in 2008 to 14 percent in 2017, Statista reported, citing data from Google. In dollar terms, non-ad revenue surged from a mere $667 million to $15.5 billion.

Infographic: Google Is Gradually Reducing Its Reliance on Advertising | Statista

Source: Statista

Betting On Other Bets

Other Bets consists of early stage businesses with the potential to become successful in the medium- to long-term.

The segment includes: 

  • The broadband internet services company Access, which was earlier called Google Fiber.
  • Calico, a R&D biotech company, focuses on therapies to combat aging and other associated diseases.
  • CapitalG, a late-stage growth venture capital fund.
  • GV, Google's venture capital investment arm.
  • Health care unit Verily.
  • The Waymo self-driving unit
  • The experimental tech lab X.

The segment, however, is bleeding, as it had an operating loss of $3.36 billion in 2017, reflecting Google's increased investment in these ventures.

Alphabet's upcoming third-quarter earnings report — on Thursday, Oct. 25 after the  close — could shed further light on the progress the company has made on in diversifying its business. 

Related Links:

Report: Google Tried To Cover Up A Data Breach

Google Home Is Gaining Ground On Amazon Echo

Posted-In: StatistaEducation Media Trading Ideas General Best of Benzinga


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