CALIFORNIA / BENGALURU (April 28): Google parent company Alphabet Inc surpassed quarterly revenue estimates on Tuesday and announced a $ 50 billion share buyback as the economy recovers and uses growing online services have combined to accelerate its advertising and cloud business.
The results are the first sign that Google services may hold on to the usage gains brought on by the lockdowns and other pandemic restrictions that have forced people to buy and communicate online over the past year. Alphabet shares rose about 4.7% to $ 2,398.61 on extended trading.
The results “reflect high online consumer activity and widespread growth in advertiser revenues,” said Ruth Porat, Alphabet’s chief financial officer, in a statement.
Google ad sales jumped 32% in the first quarter from a year ago, above the expectations of analysts tracked by Refinitiv. Cloud sales increased 45.7%, in line with estimates.
About 17% of people in the United States, Alphabet’s largest region in terms of revenue, were fully vaccinated against COVID-19 by the end of the first quarter.
Activities, including in-person dining, resumed in major cities in March, and U.S. airport security checks experienced their busiest day in a year.
The changes coincided with an increase in Alphabet’s overall sales of 34% to $ 55.3 billion, above analysts’ estimate of $ 51.7 billion, a growth of 26% from the previous year. first quarter of last year, when ad sales dropped significantly over the past two weeks.
Alphabet’s quarterly profit rose 162% to $ 17.9 billion, or $ 26.29 per share, beating estimates of $ 15.88 per share.
Profits benefited from unrealized gains on venture capital investments and a slowdown in the depreciation of some data center equipment.
The company’s operating margin rose to 30% for the first time since its inception as Alphabet in 2015, even as costs started to rise again. In 2020, Alphabet experienced its slowest sales growth in 11 years, but posted record profits and increased cash flow by $ 17 billion after slowing hiring and construction.
The share buyback authorization by Alphabet’s board of directors follows a $ 25 billion buyback program announced in 2019.
Jefferies analyst Brent Thill estimated that Alphabet now has $ 56 billion to spend to buy its shares. AD REBOUND It was not immediately clear which industries fueled Google’s growth in ad and cloud sales.
The increase in ad purchases by travel and entertainment companies would be a positive sign, as hotel reservation services and movie studios are among Google’s biggest spenders.
The advertising business of Google, the global market leader in terms of sales, accounted for 81% of quarterly revenue compared to 82% a year ago.
The operating loss of Google Cloud, a distant rival to the cloud businesses of Amazon.com Inc and Microsoft Corp, fell 44% to $ 974 million in the first quarter.
Google’s new mainstream subscription companies, such as an ad-free version of YouTube, could also grab the attention of analysts.
Shares of Alphabet have jumped 80% in the past year, 184th among companies in the S&P 500 Index. Privacy and antitrust lawsuits against Google that could lead to changes in its advertising operations have remained unanswered. concern for investors, analysts said.
But the resolution remains distant, with a key lawsuit not expected until 2023. The latest dispute arose Monday when streaming TV technology company Roku Inc accused Google of engaging in anti-competitive behavior to benefit its customers. YouTube activities and computer hardware.
Discussions on changing US and EU laws to impose new oversight on Google, Facebook Inc and other companies, especially regarding privacy and artificial intelligence, have been delayed as lawmakers have been distracted by the pandemic.
Facebook shares, which had risen 62% in the past year since Tuesday, rose 1.7% after-hours.
Shares of Amazon, another big advertising competitor, rose 0.2% after Alphabet’s results and were up 44% last year.