Google CEO Sundar Pichai
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Shares of Alphabet, Google’s flagship firm, rose nearly 8% in extended trading Tuesday after the company reported fourth-quarter earnings that exceeded analysts ’expectations and showed strong growth output in their main advertising business.
Here’s how the company did it:
- Earnings: $ 22.30 per share, adjusted, vs., $ 15.90 per share as analysts would expect, according to Refinitiv.
- Income: $ 56.90 billion, vs. $ 53.13 billion as analysts would expect, according to Refinitiv.
- Google Cloud: $ 3.83 billion, vs. $ 3.81 billion as analysts would expect, according to StreetAccount.
- YouTube Ads: $ 6.89 billion, vs. $ 6.11 billion as analysts would expect, according to StreetAccount.
- Traffic construction costs (TAC): $ 10.47 billion, vs. $ 9.32 billion as analysts would expect, according to StreetAccount.
Alphabet revenue grew 23% annually in the quarter, according to a report. That’s a stronger growth than last year’s Q4, which came in at 17%, and which shows that Google’s advertising industry is recovering well after a sharp slowdown in Q2 last year. last year.
Advertising revenue for the fourth quarter came in at $ 46.20 billion, up from $ 37.93 billion in the same quarter last year.
YouTube ads, which raised $ 6.89 billion in Q4, showed a 46% jump from this time last year when it earned $ 4.72 billion. It also saw a jump in viewership and more time spent watching videos, executives said. “We’re now reaching more people 18-49 years old than all serial TV networks combined,” said Philipp Schindler, Google’s chief business officer, as more than 100 million people stream YouTube from their TVs .
YouTube is showing particularly strong growth in “direct response” ads, which encourage users to take immediate action like downloading an app or buying something from an e-commerce site. That area of advertising was more stable last year, with brand campaign spending having a greater impact during the pandemic.
“Our direct response business on YouTube existed three years ago. Now, this is one of the largest and fastest growing advertising offerings on YouTube,” Schindler said.
Alphabet also broke operating income from its cloud business for the first time: the company lost $ 5.61 billion during the full year, and $ 1.24 billion during Q4, indicating that the industry is still in business mode. investment. On the other hand, Amazon’s cloud business earned operating profit of $ 13.53 billion last year and $ 3.56 billion last quarter.
“I am very pleased with the progress here, and … we will continue to make controlled investments to scale the business and improve profitability,” said Sundar Pichai, CEO of Google and Alphabet in an employment call.
Google Cloud revenue grew 47% year-over-year “with GCP growth staying well above the overall Cloud growth rate,” Pichai said.The company’s cloud business has secured several billion-dollar contracts in it in 2020, he said.
CFO Ruth Porat said the cloud unit continued to grow hires in sales and technical positions.
The company’s Other Bets division, which includes Verily’s life sciences unit and Waymo’s self-driving unit, raised $ 196 million in the fourth quarter and $ 657 million during the year. The company showed an operating loss of $ 4.48 billion in 2020.
Google’s “Other Revenue” came in at $ 6.67 billion in Q4. That’s up from $ 5.26 billion in Q4 2019.
Executives said the company had closed its Fitbit purchase and that its financial results will appear under their “Other” section going forward.
This story is evolving. Please check back for updates.