Alphabet, which will be releasing its fourth-quarter earnings on Monday, said it will report financial results under two segments from now on. One segment is Google, and the second is Other Bets. The Internet firm has chosen such a format to provide greater clarity on how its other holdings are performing.
What comes under each segment?
Under Google, the company will report the results of its main Internet and related businesses (search, ads, maps, YouTube, Android, Chrome, Google Play), hardware products (Chromecast, Chromebooks and Nexus) and virtual reality offerings.
Other Alphabet businesses will be covered under Other Bets, which include Access/Google Fiber, Calico, Nest, Verily (formerly known as Google Life Sciences), GV (once known as Google Ventures), Google Capital and X (formerly Google X). The company said it won’t be making any changes to its consolidated financial reporting, but rather, the changes will be made to the way its breaks out revenue.
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Alphabet stated it will continue to show Google’s advertising revenues and TSC broken out by Sites and Network. Also it will continue to share monetization metrics (click-through and cost per click growth) in aggregate and separately for Sites and Network as well.
In its historical results, the company included revenues from Other Bets under “Other Revenues,” but with the new segment reporting structure, other revenues will be reported only for the Google segment as “Google Other Revenues,” the company said in a blog post.
Google benefiting from new structure
In a blog post, Alphabet’s chief executive, Larry Page, announced the changes, saying that they have allowed the company to take a “long-term view” of its holdings and make investments accordingly.
“Fundamentally we believe this (structure) allows us more management scale, as we can run things independently that aren’t very related,” Page said.
In August, the Internet firm announced the move to the Alphabet structure, receiving applause from investors and analysts who believed it to be a shift towards greater transparency and fiscal discipline. Now, for the first time, investors will get a detailed peek into the finances of the parts outside the highly profitable search business.
Alphabet’s stock price has seen a rise of almost 13% since it announced the new structure on Aug. 10. More importantly, it is close to claiming the title of being the most valuable U.S. tech company.