Alphabet Inc, Google’s parent company, on Tuesday (1/2) reported record quarterly sales that topped expectations on Tuesday. Alphabet’s performance was supported by the soaring advertising business.
Alphabet shares jumped more than 8% in after-hours trading. Prices were also lifted by the company’s announcement of a planned stock split at a ratio of 20 to 1. Alphabet’s performance underscores the global trend towards a digital economy, where tech giants are able to cope with market shocks.
While concerns over rising inflation, rising Covid-19 infections, and supply chain shortages have rocked Wall Street and hurt sales at some businesses, the companies that control the main gateway to e-commerce, hybrid jobs and streaming entertainment haven’t seen a downturn in the first place. pandemic days.
Alphabet’s sales jumped 32 percent to $75.3 billion in the fourth quarter, for a record third straight quarter of sales. It also surpassed the average sales forecast of analysts tracked by Refinitiv, which was US$72 billion.
Consumers dive into Google searches for clothing and hobby items. While retail, finance, entertainment and travel advertisers are increasing marketing budgets, Google’s head of business, Philipp Schindler, said in an earnings call.
Analysts say Google, which generates more revenue from internet advertising than any other company. This proves that its growth is unstoppable in the future.
“The pandemic has easily accelerated the world’s reliance on digital advertising,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown. “Sitting through traditional TV commercials or reading billboards suddenly feels very old-fashioned in this age of streaming and mobile dependency.”
Alphabet shares were up 8.6% in after-hours trading, to $2,990.10, erasing their losses for the year. Shares of competitors in online advertising including Facebook owners Meta Platforms Inc, Twitter Inc, Trade Desk Inc and Snap Inc all also rose.
Under a 20-for-one stock split plan, investors as of July 1 will receive an additional 19 shares for each share held. The split, which must be approved by shareholders, would make the stock more affordable and potentially eligible for inclusion in more market indexes.
Shares of Apple Inc and Tesla Inc rose in 2020 after the split, but a growing number of brokers such as Robinhood Markets are allowing fractional share purchases, diminishing some of the benefits of the tactic.
For the full 2021 year, Alphabet’s sales are up 41% to a record $258 billion. Sales grew only 13% in 2020. The slowest rate of growth in more than a decade came after advertisers cut spending in the first few weeks of the pandemic.
In 2021 and 2020, Google’s advertising business, including YouTube, will account for 81% of Alphabet’s revenue. Companies including Amazon.com Inc and ByteDance’s TikTok have taken a small share of Google’s global advertising market share. But market forecasters don’t expect a big drop in Google’s leading position.
Google’s secondary businesses, including Cloud, have also increased overall sales. Google Cloud, which caters to clients such as online shopping software maker Shopify Inc, increased quarterly revenue by 45 percent to $5.5 billion, above the $5.4 billion forecast.
The division’s operating loss narrowed by 45% to US$3.1 billion in 2021. Alphabet Chief Executive Sundar Pichai told analysts that Cloud is exploring how to support clients looking to use blockchain, one of several emerging technologies that proponents consider essential to kickstart a new era of online innovation.
Alphabet also reported record quarterly sales during the holiday season for its Google Pixel smartphones, despite what Pichai called “very challenging” supply constraints.
Alphabet’s quarterly profit was $20.6 billion, or $30.69 per share, beating expectations of $27.56 per share and marking a record fourth straight quarter of earnings.
Profits increased in line with unrealized gains from Alphabet’s investment in startups, and the company saw a US$2 billion increase over last year from extending the useful lives of its servers and network equipment.
For 2021, Alphabet’s profit increased 89% to $76 billion.
Alphabet’s total costs in 2021 increased 27% to $178.9 billion as the company resumed pre-pandemic recruiting and construction steps. The company also noted an increase in legal fees, the cost of a one-time bonus of US$1,600 for all employees, and an increase in charitable contributions as they matched the increase in giving by employees.
Lawsuits accusing Google of anti-competitive actions in the advertising market and mobile app store continue to be the company’s biggest challenge. Google has said its efforts to lower the cost of its Play app store to ease concerns about falling revenue.
Alphabet’s cash pile grew by nearly $3 billion in 2021 to $139.6 billion, with another $50 billion to be repurchased in shares.
Operating losses for Other Bets, a unit that includes self-driving tech firm Waymo and other non-Google ventures, were $5.3 billion in 2021, widening from $4.5 billion in 2020. The company offered no prospects. 2022 financial year for the unit.