Alphabet Is Showing More R&D Restraint Under Ruth Porat’s Leadership

Alphabet Showing Spending Restraint

Alphabet Inc. is showing new restraint in R&D spending according to the company’s first quarterly regulatory filing as the restructured Google.

In the filing late Thursday, Alphabet said it expects future research & development expenses to “fluctuate” as a percentage of revenue. Last quarter Google said R&D spending “may increase” as a percentage of revenue.

Alphabet also showed in its latest quarterly filing for sales and marketing expenses that spending is growing more in line with revenue.

One of Alphabet’s largest expenses is research & development.┬áIn the third quarter, R&D expenses totaled $3.23 billion, or 17.3% of revenue, an┬áincrease from 16.1% of revenue a year earlier.

Ruth Porat showed very disciplined restraint with finances while CFO at Morgan Stanley. She promised to get a handle of Google’s spending and be more transparent with analysts when she took over the CFO position at the company.

Last week Porat told analysts that Alphabet was “focused on managing expenses within our control.”

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Alphabet said costs and expenses totaled $13.97 billion in the third quarter, up 9% from a year earlier. That compares to a 28% year-over-year surge in the third quarter of 2014.

Alphabet shares are up 33% in the past six months. The Nasdaq in comparison grew by only 1% during the same period.