On Tuesday, Alphabet Inc, the parent company of Google, reported record quarterly sales that surpassed forecasts, as its internet advertising business grew as a result of consumers utilizing Google search while shopping online and advertisers increasing their marketing budgets.
In after-hours trading, Alphabet’s stock rose more than 8%, boosted by the company’s announcement of a 20-to-one stock split.
The findings are the latest proof that the worldwide shift to a more digital economy has made Big Tech businesses more resilient to small-market shocks. While rising inflation, COVID-19 variants, and supply-chain constraints have scared Wall Street and affected some businesses’ revenues, the corporations that control critical gateways to e-commerce, hybrid work, and streaming entertainment have not witnessed a drop since the early days.
In the fourth quarter, Alphabet’s sales increased by 32% to $75.3 billion, setting a new quarterly sales record and exceeding the average expectation of $72 billion among financial experts polled by Refinitiv.
Consumers used Google to browse for garments and hobbyist items, while marketers in retail, finance, entertainment, and travel increased their marketing budgets, according to Philipp Schindler, Google’s chief business officer.
Analysts believe Google, which earns more money from internet adverts than any other corporation, is demonstrating that its expansion is unstoppable for the time being.
“The epidemic has dramatically increased the world’s dependency on internet advertising,” said Sophie Lund-Yates, a Hargreaves Lansdown equity analyst. “In the age of streaming and cell phone addiction, sitting through traditional TV commercial breaks or reading billboards feels hopelessly ancient.”
Alphabet’s stock climbed 8.6% in after-hours trading to $2,990.10, erasing the company’s year-to-date losses. Facebook’s parent company, Meta Platforms Inc, Twitter Inc, Trade Desk Inc, and Snap Inc all saw their stock rise.
Investors will receive 19 more shares for each one held as of July 1 under the planned 20-for-one stock split. The stock will be more inexpensive and potentially eligible for inclusion in index funds as a result of the split, which is subject to shareholder approval.
After splits, shares of Apple Inc and Tesla Inc soared in 2020, but brokerages like Robinhood Markets are increasingly allowing fractional share purchases, reducing the value of the strategy.
YEAR OF THE BANNER
Alphabet’s total sales for the year 2021 increased by 41% to a new high of $258 billion. After advertisers slashed spending in the first few weeks of the epidemic, sales grew at the weakest rate in over a decade in 2020.
Google’s advertising business, which includes YouTube, accounted for 81 percent of Alphabet’s income in both 2021 and 2020.
Amazon.com Inc and ByteDance’s TikTok have been stealing a little chunk of Google’s global ad market. Market analysts, on the other hand, do not expect Google’s lead to be much eroded. Google’s subsidiary operations, such as Cloud, have also helped to boost overall sales.
Google Cloud, which works with companies including Shopify Inc, grew quarterly revenue by 45 percent to $5.5 billion, beating analyst expectations of $5.4 billion.
In 2021, the division’s operational deficit shrank by 45 percent to $3.1 billion.
Cloud is studying how to help clients who want to utilize blockchain, one of several emerging technologies that proponents see as critical to kicking off a new era of internet advancements, according to Alphabet Chief Executive Sundar Pichai.
Despite what Pichai described as “very tough” supply limitations, Alphabet claimed a quarterly sales record for its Google Pixel smartphones during the holiday season.
Alphabet’s quarterly profit was $20.6 billion, or $30.69 per share, exceeding analysts’ projections of $27.56 per share and marking the company’s fourth consecutive quarter of record profits. The profit was boosted by unrealized gains from Alphabet’s startup investments, as well as a $2 billion increase from extending the usable life of its servers and networking equipment last year.
Alphabet’s profit grew by 89 percent to $76 billion in 2021.
In 2021, Alphabet’s overall spending surged by 27% to $178.9 billion, as the business resumed its pre-pandemic employment and construction pace. Greater legal expenditures, costs from a $1,600 one-time bonus for all employees, and an increase in philanthropic contributions as it matched increased giving by employees were all mentioned by the corporation.
One of Google’s major challenges is the numerous lawsuits accusing the corporation of anticompetitive behavior in the advertising and mobile app store marketplaces. To ease some of the fears, Google has previously stated that lowering Play app store fees will affect revenue.
In 2021, Alphabet’s cash hoard increased by over $3 billion to $139.6 billion, with another $50 billion spent on stock repurchases.
Other Bets, which includes self-driving technology business Waymo and other non-Google operations, had an operating loss of $5.3 billion in 2021, up from $4.5 billion in 2020. The unit’s financial projection for 2022 was not provided by the corporation.
