Alphabet reported huge top and bottom gains and a new $ 50 billion share buyback for the first quarter of 2021. This increased the share in after-hours trading by more than 4%.
Here’s how Google’s parent company performed in the quarter compared to Wall Street analysts surveyed by Refinitiv:
- Merits: Expected $ 26.29 per share versus $ 15.82 per share
- Revenue: Expected to be $ 55.31 billion versus $ 51.70 billion
- Google Cloud Revenue: FactSet estimates $ 4.05 billion versus $ 4.07 billion.
- YouTube ads: $ 6.01 billion versus $ 5.70 billion, according to StreetAccount.
- Traffic Acquisition Costs (TAC): FactSet estimates $ 9.71 billion versus $ 9.25 billion.
Google’s revenue increased 34% over the same period last year. The company reported advertising revenue of $ 44.68 billion for the quarter. That’s a sharp increase from $ 33.76 billion in the same quarter last year. This makes it the fastest annualized growth rate in at least four years, although the results were increased by being easily compared with the same quarter of the previous year, as the outbreak of the coronavirus pandemic caused a sharp drop in advertising spending.
YouTube ads were $ 6.01 billion for the quarter – up 49% year over year.
YouTube became the winner of the pandemic in terms of social media websites, according to a recent Pew report. On the video platform, usage increased from 73% of adults in the US in 2019 to 81% in 2021.
Sundar Pichai, CEO of Alphabet, said on the company’s call for profits that YouTube’s TikTok competitor Shorts is getting 6.5 billion views a day, up from 3.5 billion at the end of January.
Google Cloud revenue rose 46% year over year to $ 4.05 billion, in line with Wall Street expectations. During the quarter, the company lost $ 974 million, significantly reducing losses from the year-ago period. Google Cloud includes infrastructure and data analytics platforms, collaboration tools like Google Docs, and “other enterprise customer services”.
The company also added $ 4.84 billion in value on certain investments during the quarter. (This was offset by a $ 86 million depreciation in the value of other unspecified investments for a total of $ 4.75 billion in net income.) It was not disclosed which investments were driving profits, but UiPath, Stripe and Oscar Health are probably all contributing to this. Instead of waiting to sell stocks to record a profit, the company uses “different valuation techniques” to “adjust the book value of our stocks up and down based on observable price changes”.
The company’s “other bets” segment, which includes health tech unit Verily and autonomous vehicle betting Waymo, lost $ 1.15 billion on sales of $ 198 million.
Alphabet’s board of directors approved an additional share buyback of up to $ 50 billion on April 23.
In March, Google announced a $ 7 billion investment to expand offices and data centers in 19 states, creating at least 10,000 full-time positions. It did when the company doubled in size after moving its workforce back to physical offices after the pandemic. In the company’s statement of results, CFO Ruth Porat reaffirmed her commitment to the construction and retrofitting of offices.
“Even in a hybrid working environment, we will still need space, so we are expanding our locations and offices,” said Porat. She added the company expects to “pick up” the pace of real estate spending later this year as it equips its locations for the new hybrid work environment.
– CNBC’s Jessica Bursztynsky contributed to this report.