Google business booms on ad surge
MOUNTAIN VIEW: Google’s results, showing a surge in ad sales related to travel and retail, offered a glimpse of online spending in a post-covid world: Businesses are boosting digital marketing to capture a public eager to resume something resembling normal life again.
Google parent Alphabet Inc. said first-quarter revenue, excluding payments to distribution partners, came in at $45.6 billion, pummeling Wall Street estimates. It also unveiled a big new share buyback, sending the stock up more than 4% in premarket trading Wednesday.
Ruth Porat, chief financial officer, said the results “reflect elevated consumer activity online and broad based growth in advertiser revenue.”
During a conference call with analysts, he said it’s unclear how “durable” the change in consumer behaviour will be, because it will depend on the global pace of the Covid-19 recovery.
Barclays analysts said Alphabet’s search and YouTube segments saw a significant share shift from other advertising channels, dampening concerns about Google’s high penetration within the advertising market.
The Alphabet board authorised the company to repurchase up to an additional $50 billion of its Class C capital stock.
Chief executive officer Sundar Pichai is trying to expand beyond the advertising engine that generates most of Alphabet’s revenue, while contending with a regulatory backlash that includes three government antitrust suits targeting different parts of its business in the US.
Search and other related businesses generated sales of $31.9 billion in the first quarter. Wall Street estimated $29.9 billion.
YouTube ad revenue surged 49% to $6 billion. Analysts were looking for $5.7 billion. YouTube Shorts, its competitor to TikTok, logged 6.5 billion daily views as of March, up from 3.5 billion at the end of 2020.
Its cloud division, led by Thomas Kurian, is wooing corporations and other large customers in a bid to catch market leaders Amazon.com Inc. and Microsoft Corp. Google Cloud revenue jumped to $4 billion, in line with Wall Street expectations. Executives said the Google Play store, YouTube’s non-ad revenue and consumer hardware were the top drivers of growth in the “Google Other” category. Alphabet’s Other Bets, such as autonomous vehicles and delivery drones, generated revenue of $198 million. That division lost $1.15 billion.
Alphabet overall generated $17.9 billion of net income, or $26.29 a share, in the quarter, compared with $6.8 billion, or $9.87 a share, a year earlier.