Google Owner Alphabet Reports Strong Quarter Amid Firm Growth in Ads Business

By Avi Ben Ezra Wednesday, February 3, 2021

Alphabet, the parent company of tech giant Google, saw its stock price gain in after-hours trading Wednesday after reporting stronger-than-expected earnings for its Q4.

A businessman drawing on a virtual stock chart.

Strong Recovery in Core Ads Business

The company reported earnings per share of $22.30, which easily beat the $15.90 per share expected from the market analysts. Revenue surged 23% to $56.90 billion to exceed $53.13 billion expected from the Street.

The search business generated $46.20 billion from the ads, which represents a growth of 22% as it raked in $37.93 billion a year ago.

“Our strong results this quarter reflect the helpfulness of our products and services to people and businesses, as well as the accelerating transition to online services and the cloud. Google succeeds when we help our customers and partners succeed, and we see significant opportunities to forge meaningful partnerships as businesses increasingly look to a digital future,” Sundar Pichai, CEO of the company, said in a statement.

“Our strong fourth quarter performance, with revenues of $56.9 billion, was driven by Search and YouTube, as consumer and business activity recovered from earlier in the year. Google Cloud revenues were $13.1 billion for 2020, with significant ongoing momentum, and we remain focused on delivering value across the growth opportunities we see,” Ruth Porat, CFO of the company, added.

The company also disclosed for the first time revenues of its Google Cloud — $3.83 billion, while it lost $5.61 billion during the full year. This shows there is a lot of ground to cover in this sector as the business is still in investment mode.

“I’m very pleased with the progress here, and...we’ll continue making disciplined investments to scale the business and improve profitability,” Pichai added during a call with investors.

Analysts were impressed with the company’s latest quarterly results. Susquehanna analyst Shyam Patil reiterated that a group of catalysts — namely ad growth, Cloud ramp, better cost management, and a more “shareholder-friendly capital allocation approach” — will continue to drive growth for the online business.

Patil raised the price target on Google (NASDAQ: GOOGL) stock to $3,000 per share, which is a new Street high.

Summary

Google parent company Alphabet reported an extremely impressive set of quarterly figures after the company witnessed a strong return to growth in the ads business.

About the Author


Headshot for author Avi Ben Ezra

Avi Ben Ezra is the Chief Technology Officer (CTO) and Cofounder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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