๐๐น๐ฝ๐ต๐ฎ๐ฏ๐ฒ๐ ๐ฑ๐ฒ๐น๐ถ๐๐ฒ๐ฟ ๐ฎ ๐ฟ๐ฒ๐ฐ๐ผ๐ฟ๐ฑ ๐พ๐๐ฎ๐ฟ๐๐ฒ๐ฟ
Our largest holding $GOOG (Alphabet)$GOOGL (Alphabet Inc Class A) released impressive quarterly earnings figures last night for their third quarter of 2025.
๐๐ถ๐ด๐ต๐น๐ถ๐ด๐ต๐๐
๐ฅ๐ฒ๐๐ฒ๐ป๐๐ฒ of $102.3B = 16% increase year on year
This is the first quarter where Alphabet generated more than $100B in revenue
๐ข๐ฝ๐ฒ๐ฟ๐ฎ๐๐ถ๐ป๐ด ๐๐ป๐ฐ๐ผ๐บ๐ฒ of $31.2B, an increase of 9.5% over Q3 2024. This would've been an increase of 22% had it not been for a $3.5B fine from the EU for infringement of EU competition laws.
๐ข๐ฝ๐ฒ๐ฟ๐ฎ๐๐ถ๐ป๐ด ๐ ๐ฎ๐ฟ๐ด๐ถ๐ป of 31%. This is down from 32% this time last year but it wouldd have been 33.9% without the EU fine. From this we can see that Alphabet are increasing revenues at a double digit pace without compromising on profitability.
๐ฆ๐ฒ๐ด๐บ๐ฒ๐ป๐ ๐๐ป๐ณ๐ผ๐ฟ๐บ๐ฎ๐๐ถ๐ผ๐ป
๐๐ผ๐ผ๐ด๐น๐ฒ ๐ฆ๐ฒ๐ฟ๐๐ถ๐ฐ๐ฒ๐ ๐ฅ๐ฒ๐๐ฒ๐ป๐๐ฒ of $87B which is an increase of 13.8% year over year
๐๐ผ๐ผ๐ด๐น๐ฒ ๐๐น๐ผ๐๐ฑ experienced a revenue increase of 34% to $15.2B - this segment is experiencing exponential operating income growth now that it has achieved critical scale. Operating income for this segment increased by 84.6% this quarter compared to the same quarter last year.
๐ข๐๐ต๐ฒ๐ฟ ๐๐ฒ๐๐ revenue declined by 11.3%. This is the experimental side to Alphabet. Companies here include Waymo, Wing and Verily, amongst others. None of these companies are large enough to justify their own segment in the accounts and so are lumped together here. It is a small part of Alphabet overall as it accounted for 0.3% of the revenue this quarter.
๐๐ฟ๐ฒ๐ฒ ๐๐ฎ๐๐ต ๐๐น๐ผ๐ (FCF) for the quarter was $24.5B, up 38.7% compared to this time last year. Free cash flow here is defined as cash flows from operations minus purchases of property and equipment.
This impressive growth should be considered even more impressive when we acknowledge that Alphabet are expanding their levels of property and equipment far in excess of the depreciation values. The company is expanding to position itself as a leader in search, cloud computing and AI and, yet, FCF is still expanding rapidly.
๐ฅ๐ฒ๐ฑ๐๐ฐ๐ฒ๐ฑ ๐ฆ๐ต๐ฎ๐ฟ๐ฒ ๐๐ผ๐๐ป๐
One way Alphabet is using their excess cash is by repurchasing shares. In the last three months the company spent $11.5B on repurchasing shares - this outweighs the $6.4B stock based compensation expense for the same period. This is a continuous pattern for Alphabet and the result is that the outstanding share count 1.7% over the year.
๐๐ฎ๐น๐ฎ๐ป๐ฐ๐ฒ ๐ฆ๐ต๐ฒ๐ฒ๐
Alphabet's balance sheet is strong. The current ratio (current assets divided by current liabilities) is 1.7. Anything over 1 is considered safe. Their cash, cash equivalents and marketable securities alone can almost cover their current liabilities (payments due within a year).
Goodwill increased by 4.3% as the company continues to grow partly via acquisitions. However, Goodwill only accounts for 6.2% of Alphabet's assets and that figure is down from 7.1% nine months ago.
๐ก๐ฒ๐ ๐ฃ๐ฟ๐ผ๐ณ๐ถ๐
I didn't include Net Profit until now because for Alphabet net profit doesn't give a true picture of how the company is performing - for that we use operating profits.
Alphabet own a substantial equity portfolio, the performance of which can distort their results. Of course, the performance of the portfolio is important to us as shareholders as we must question whether management are making the best use of our capital. However, to assess how the company itself if operating, we need to ignore the equity portfolio.
The portfolio made an unrealised gain of $10.9 billion this quarter (last year this gain was $2 billion). The accounting treatment of this is to include it in net profits. Therefore, net profit for the quarter rose by 33% to $35B. Diluted earnings per share for the same period increased by 35.4% due to a lower share count.
Those two figures, while important, distort the underlying performance of the company and without this acknowledgement we could become carried away when assigning a value to the company. So, to reiterate, operating profit for the quarter grew by 9% - this of course includes the fine from the EU.
๐ฆ๐๐บ๐บ๐ฎ๐ฟ๐
Alphabet delivered a milestone quarter as revenue exceeded $100 billion for the first time
The company achieved double digit growth across its major segments
Essential heavy infrastructure and AI investments are being made and are not having a detrimental impact to free cash flow
Momentum is growing in terms of their AI features and products
... Show More
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Mon Feb 09 2026 21:33:35 GMT+0000 (Coordinated Universal Time)
