Alphabet revenue beats Wall Street estimates; shares jump
Alphabet Inc. reported quarterly sales that beat Wall Street estimates, buoyed by heavy digital advertising spending during the holiday shopping quarter. The shares jumped about 7% in extended trading.
Fourth-quarter revenue, excluding payments to distribution partners, came in at $46.43 billion, the Mountain View, California-based company said in a statement. Analysts, on average, expected $44.2 billion, according to data compiled by Bloomberg.
Online ad sales have rebounded since the early days of the pandemic, when the economy faltered and marketers pulled back. Analysts expected Google to benefit from increased online search activity and YouTube viewership while people remained stuck at home to curb the spread of the virus.
“Consumers continue to move more activity online, and advertisers responded to this shift by reactivating spend they had paused,” said Google CBO Philipp Schindler.
'Utility of advertising'
Google CEO Sundar Pichai echoed that sentiment. “One thing that’s worked well over the years is we’ve really tried to reach users at where they are.”
Ruth Porat, chief financial officer, Google and Alphabet, said the surge in ad revenue echoed what the company experienced in previous financial crises, with advertisers stepping back their advertising at first, and then resuming spending as the “utility of advertising” makes itself clear.
Last week, Facebook Inc. reported surging revenue growth after online shopping boosted the digital ads market. That spurred additional gains in Alphabet shares, which have jumped about 10% so far this year.
Alphabet now has three reported segments and discloses revenue and the operating income or loss for each:
Google Services, which includes Search, advertising, Android, Chrome, hardware, Google Maps, Google Play and YouTube.
Google Cloud, including the company’s technical infrastructure and data-analytics platforms, collaboration tools and other services for enterprise customers.
Other Bets, such as the Waymo driverless car business.
—Bloomberg News; contributing: Mike Juang