Alphabet sales growth revived as advertisers flock back to Google

Google parent Alphabet Inc recently powered back to sales growth, beating analysts’ estimates for the third quarter as businesses initially hobbled by the coronavirus pandemic resumed advertising with the internet’s biggest supplier of ads. Alphabet shares, up 13% on the year, rose 8.5% after hours to $1,689.89. Google’s billions of users are spending more time online transacting and entertaining themselves this year as they try to avoid the virus. But many advertisers ceased spending in the second quarter as travel and leisure activity disappeared. As the global economy in the third quarter began to chug along again, advertisers flocked to Google to let shoppers know about deals and adjusted service offerings. Google also gained from political ad spending ahead of the U.S. presidential election on Nov. 3, advertising analysts said.

Ad sales surged across all regions and industries, Alphabet Chief Financial Officer Ruth Porat said. For instance, U.S. revenue grew 15% in the third quarter compared with 1% in the second quarter. Porat declined to say whether the trend was sustainable in the fourth quarter, with Europe and other areas once again locking down because of significant increases in infections. “While we’re pleased with our performance in the third quarter, there is obviously uncertainty in the external environment,” Porat said. Google rival Facebook Inc warned that the recent bump in online shopping, which has been good for online ad sellers, may not carry through next year. Google’s cloud business was about flat with the second quarter, as were the company’s sales of apps, hardware and content subscriptions. Alphabet said it would elevate cloud into a separate reporting unit starting in the fourth quarter, effectively dropping cloud financial results from its Google unit and giving investors their first view into the business’ profitability.n