Alphabet blows past Wall Street’s quarterly earnings expectations as search and YouTube ad revenue surge

Sundar Pichai
Google CEO Sundar Pichai.

  • Google’s parent Alphabet announced its Q2 earnings Tuesday, beating Wall Street expectations.
  • Alphabet reported $61.9 billion in total revenue versus $56.1 billion expected by analysts.
  • Google’s ad services brought in $57.1 billion, while Cloud revenue grew to $4.6 billion.
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Alphabet blew past Wall Street’s second-quarter earnings expectations as the company continued benefit from the massive uptick in digital commerce during the pandemic.

Google’s parent company brought in $61.9 billion in total revenue during the quarter, up 62% year-over-year, versus $56.1 billion expected by analysts.

A year after its first-ever revenue decline, Google’s ad business skyrocketed in Q2 2021 with $57.1 billion in revenue, up 69% year-over-year, driven largely by Google search ads, which brought in $35.8 billion in revenue.

The company said advertising revenue at its YouTube division rose 84% year-over-year to $7 billion.

Google Cloud earned $4.6 billion in revenue and cut its operating loss to $591 million in Q2, its third-straight quarter of revenue growth since Google started separately reporting the financial performance of its cloud division in Q4 2020.

Here’s what Alphabet reported, compared to what analysts expected, according to Bloomberg.

  • Total revenue: $61.88 billion (Expected $56.03 billion, according to Yahoo Finance)
    • Revenue minus TAC: $50.95 billion (Expected $46.08 billion)
    • Google services revenue: $57.07 billion
    • Google Cloud revenue: $4.63 billion (Expected $4.34 billion)
  • Net income: $18.53 billion (Expected $13.05 billion)
  • Earnings per share (GAAP): $27.26 per share (Expected $19.35)

Tuesday marked Google’s first earnings report since announcing in March that it would make a major shift away from precisely tracking individual users based on their internet activity, viewed by some experts as a move to entrench its dominance of the digital ads market.

Google’s earnings also come as the company faces multiple antitrust lawsuits and likely a tougher regulatory environment under Biden appointees like Federal Trade Commission chair Lina Khan, as well as criticism from employees over its sexual-misconduct policies and dismantling of its AI ethics team following the departure of Timnit Gebru.

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Google parent Alphabet jumps to record as strong ad sales push 1st-quarter results past Wall Street’s forecasts

Alphabet & Google CEO Sundar Pichai
Alphabet CEO Sundar Pichai.

  • Alphabet shares hit all-time highs Wednesday following first-quarter results that beat expectations.
  • Earnings of $26.29 per share came in higher than the $15.82 per share estimate from Refinitiv.
  • Alphabet also got authorization from its board to repurchase up to an additional $50 billion of its shares.
  • See more stories on Insider’s business page.

Shares of Google parent Alphabet hit record intraday highs on Wednesday after the company posted first-quarter earnings and revenue that beat Wall Street expectations. The tech giant was also authorized by its board to repurchase up to an additional $50 billion of its own stock.

A 34% rise in revenue supported by stronger advertising sales helped the company blow past analyst estimates.

Earnings were $26.29 per share, well above the Refinitiv estimate of $15.82 per share and earnings of $9.87 per share a year earlier.

Total revenue of $55.31 billion was ahead of the $51.70 billion estimate from Refinitiv. A year ago, revenue was $44.16 billion. The increase reflected consumer activity online and broad-based ad revenue growth, the company said.

Traffic acquisition costs came in at $9.71 billion, up from $7.45 billion a year earlier.

The stock climbed as much as 5% to $2,397 per share. It’s gained 31% year-to-date, driven in part by investors expecting the company to benefit from increased use of search services amid the pandemic.

“Over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained. We’ve continued our focus on delivering trusted services to help people around the world,” said Sundar Pichai, Alphabet’s CEO, in a statement.

Revenue from Google Search rose to $31.9 billion from $24.5 billion and YouTube ads drew in $6 billion, up from $4 billion in the prior period.

“We see a permanent shift to digital drawing ever more ad dollars, with particular strength in YouTube as it is the new TV of this decade. Further, we see real momentum across Google as the global economy re-opens in stages and marketing budgets ramp up,” said Brent Thill, an equity analyst at Jefferies, in a note.

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