The internet-search giant reported sales, excluding partner payouts, rose 33 per cent to US$61.9 billion
Author of the article:
Bloomberg News
Mark Bergen
The Google campus in Mountain View, California. Photo by Justin Sullivan/Getty Images files Google parent Alphabet Inc. posted fourth-quarter sales and profit that topped analysts’ projections, showing the resilience of its advertising business in the face of major economic upheaval as the pandemic persists. The shares soared in late trading.
Advertisement This advertisement has not loaded yet, but your article continues below.
The internet-search giant reported sales, excluding partner payouts, rose 33 per cent to US$61.9 billion, compared with the US$59.4 billion average analyst estimate. Google’s advertising revenue also grew by 33 per cent during the holiday quarter, despite the disruptions to its biggest categories, travel and retail, from the spread of the omicron COVID-19 variant and supply chain crunches. The company also declared a 20-for-1 stock split.
Two other key growth areas, cloud computing and YouTube, also posted robust sales gains. Since the start of the pandemic, Google has been investing heavily in online commerce, luring in more merchants to sell items on its shopping service and run product ads. During the fourth quarter, YouTube launched a new shopping initiative with some of its young star creators. Overall viewership of the video site has continued to climb, particularly on TV screens.
Advertisement This advertisement has not loaded yet, but your article continues below.
“Google remains one of the best-positioned companies across digital advertising given its market-leading position in search, exposure to video with YouTube, and full ad tech offering,” Andrew Boone, an analyst at JMP Securities, wrote in a research note before the results.
Net income climbed to US$20.6 billion, or US$30.69 a share, compared to the US$27.35 per-share estimate, Alphabet said Tuesday in a statement. Shares surged 7.4 per cent in extended trading, after closing at US$2,752.88. The stock has declined about five per cent so far this year.
Google managed to beat analyst estimates in nearly every business unit, including search ads, cloud computing and its grab-bag “other” line that includes hardware and app store sales. Google’s Network business, which runs ads on other websites, grew 26 per cent to US$9.31 billion, despite increased regulatory pressure on the display ads operations.
Advertisement This advertisement has not loaded yet, but your article continues below.
The YouTube video site raked in US$8.63 billion during the holiday, a gain of 25 per cent but just shy of the US$8.76 billion analysts were expecting on average. Of all Google’s divisions, YouTube is the most exposed to changes Apple Inc. has made to limit targeting on iPhones.
In their third-quarter report, Google executives said YouTube had seen a “modest impact” on revenue from Apple’s move to limit ad targeting on iPhones. Compared with rivals like Meta Platforms Inc.’s Facebook and Snapchat parent Snap Inc., Google is less reliant on third-party trackers Apple has banned. In a research note before earnings, analyst Mark Mahaney of Evercore ISI wrote that “Google has likely been a beneficiary” of Apple’s restrictions.
Advertisement This advertisement has not loaded yet, but your article continues below.
More On This Topic McDonald’s investors say ex-CEO Steve Easterbrook must return more pay David Rosenberg: NFTs may be nifty, but not when it comes to investing in them How investors can protect themselves from geopolitical, fiscal and monetary risks In recent years, Google has directed a hefty portion of its investment and new personnel to its cloud division, which lags behind Amazon.com Inc. and Microsoft Corp. in selling computing power and storage to corporations. Google’s cloud unit generated US$5.54 billion in sales in the fourth quarter, when it picked up some key customers such as CME Group. Analysts were anticipating US$5.42 billion.
Alphabet also continued to invest heavily in nascent businesses, including Waymo, the self-driving car unit, and Verily, which aims to solve various health issues with technology. Those units, known as Other Bets, collectively lost US$1.45 billion for the recent quarter.
This advertisement has not loaded yet, but your article continues below.
Article content Traffic acquisition costs — the funds Google pays out to publishers and device makers like Apple Inc., a figure investors monitor closely — rose 28 per cent in the quarter.
Google still has money to spend, with cash and equivalents of US$139.6 billion as of year’s end. But the company is the target of a mounting number of lawsuits and regulatory threats, sparking some concern about how that scrutiny may limit its ability to expand. A trio of states have brought recent privacy cases against the company, adding to antitrust suits in Texas and its home state of California, and a federal antitrust suit brought by the U.S. Justice Department. Congress has also introduced a suite of bills that could force Google to curb some of the data-collection practices that power its ads business.
The stock split will take the form of a one-time special stock dividend, the Mountain View, California-based company said Tuesday in a regulatory filing. Alphabet said it will give US$0.001 for each share of the company’s Class A stock, Class B stock and Class C stock.
Bloomberg.com
Financial Post Top Stories Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.
By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300