Alphabet sales soar 20%, no thanks to Google's moonshots

Inside Google's NYC pop-up shop
Inside Google's NYC pop-up shop

The real moonshot at Google remains its advertising business.

Google's (GOOGL) sales for the third quarter soared 20% to $22.45 billion on the success of its core business: online advertising. Its quarterly profit also jumped to $5 billion for the same reason.

But one year after Google restructured to become Alphabet, its more ambitious projects still contribute almost nothing to its overall sales.

Sales from Other Bets, the division that includes Fiber and Nest, was just $197 million of that $22.45 billion for the quarter, compared to $141 million a year earlier.

Meanwhile, losses from the moonshot efforts hit $865 million for the quarter, down slightly from $980 million a year earlier.

The promise of Google's restructuring was, in part, that it could groom other promising ventures in house and one day grow them to be larger and self-sustaining. So far, there have been some road bumps.

Related: Google brings its moonshots back to earth

During its first year as Alphabet, the company lost top execs at Nest, Fiber and its self-driving car divisions. Earlier this week, Google put the brakes on the expansion of Fiber, a high-speed Internet service, and announced plans for layoffs.

On a conference call with analysts after the earnings release, Alphabet CFO Ruth Porat noted that there will inevitably be "course corrections" with the less mature moonshot efforts.

Porat added that there has been "increased adoption" for Nest and said that the self-driving car division is making progress with testing on roads in four cities.

For Fiber in particular, Porat said the team is pausing to "focus on the potential" of new efforts like wireless technology "before we re-accelerate deployment."

To make matters more complicated, Google is now watching former employees bring similar moonshots to market. Otto, a self-driving truck service started by ex-Googlers and acquired by Uber, completed its first shipment this week for Budweiser.

"We generally want to encourage a culture of innovation. It is fine that some of them happen outside," Google CEO Sundar Pichai said on the call. "We don't view it as a zero sum game."

One non-advertising segment growing significantly is "Google other revenues," which includes its cloud business, hardware efforts and app store sales.

Sales in this division were $24 billion for the quarter, up 39% from a year earlier. That may only increase as Google rolls out its Pixel smartphone and VR headset.

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