Google CEO Sundar Pichai
Stocks of Alphabet, the parent company of Google, rose nearly 8% in expanded trading Tuesday after the company reported fourth-quarter earnings that exceeded analysts’ expectations.
This is how the company did it:
- Merits: According to Refinitiv, $ 22.30 per share, up from $ 15.90 per share as analysts expected.
- Revenue: According to Refinitiv, $ 56.90 billion versus $ 53.13 billion as analysts expected.
- Google Cloud: StreetAccount reported $ 3.83 billion versus $ 3.81 billion as analysts expected.
- YouTube ads: StreetAccount reported $ 6.89 billion versus $ 6.11 billion as analysts expected.
- Transport procurement costs (TAC): StreetAccount says it was $ 10.47 billion versus $ 9.32 billion as analysts expected.
Alphabet’s sales grew 23% on an annualized basis for the quarter, according to a statement. This is stronger growth than in the fourth quarter of the previous year (17%). This suggests that Google’s advertising business is recovering well after a sharp slowdown in the second quarter of last year.
Fourth quarter advertising revenue was $ 46.20 billion, compared to $ 37.93 billion in the year-ago quarter. YouTube ads, which grossed $ 6.89 billion in the fourth quarter, showed a big jump from that time last year when they grossed $ 4.72 billion.
The largest advertising sector came from retail, executives said.
YouTube, which saw a huge surge in ad sales, also saw an increase in viewers and an increased amount of time spent watching videos. “We are now reaching more 18- to 49-year-olds than all linear TV channels combined,” said Philipp Schindler, Google’s Chief Business Officer.
100 million people stream YouTube from their televisions, Schindler said.
The company has also had its first operating income from its cloud business: the company lost $ 5.61 billion for the full year and $ 1.24 billion for the fourth quarter, showing that the company is still in investment mode . In contrast, Amazon’s cloud business generated operating income of $ 13.53 billion last year and $ 3.56 billion in the most recent quarter.
“I am very pleased with the progress here and … we will continue to make disciplined investments to scale the business and improve profitability,” said Sundar Pichai, CEO of Google and Alphabet, in a notice of earnings.
Google Cloud revenue grew 47% year-over-year, “with GCP growth remaining well above the overall cloud growth rate,” added Pichai. The company’s cloud business closed multi-billion dollar deals in 2020, he said.
CFO Ruth Porat said the cloud unit will continue to hire new people in sales and tech.
The company’s other betting segment, which includes Verily life sciences division and Waymo self-propelled division, grossed $ 196 million in the fourth quarter and $ 657 million during the year. The company posted an operating loss of $ 4.48 billion in 2020.
Google’s “Other Revenue” was $ 6.67 billion for the fourth quarter. That’s an increase of $ 5.26 billion in the fourth quarter of 2019.
Executives said the company has completed its Fitbit acquisition and that its financial results will appear under the “Other” segment going forward.
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