SAN RAMON, Calif .: The parent company of Google Alphabet beat quarterly revenue estimates on Tuesday, April 27, and announced a US $ 50 billion share buyback as the economic recovery and growing use of online services shrank. combined to accelerate its advertising and cloud business.
The results are the first sign that Google services may hold on to the usage gains brought about by lockdowns and other pandemic restrictions that have forced people to shop and communicate online over the past year.
Alphabet shares rose about 4.7 percent to US $ 2,398.61 in extended trading.
The results “reflect high online consumer activity and widespread growth in advertiser revenues,” said Ruth Porat, Alphabet’s chief financial officer, in a statement.
Google ad sales jumped 32% in the first quarter from a year ago, above the expectations of analysts tracked by Refinitiv. Cloud sales increased 45.7%, according to estimates.
About 17% of people in the United States, Alphabet’s largest region in terms of revenue, were fully vaccinated against COVID-19 by the end of the first quarter. Activities, including in-person dining, resumed in major cities in March, and security checks at U.S. airports experienced their busiest day of the year.
The changes coincided with Alphabet’s overall sales increase by 34% to $ 55.3 billion, above analysts’ estimate of $ 51.7 billion, a 26% growth from the previous year. first quarter of last year, when ad sales fell dramatically over the past two weeks.
Alphabet’s quarterly profit rose 162 percent to US $ 17.9 billion, or US $ 26.29 per share, beating estimates of US $ 15.88 per share. Profits benefited from unrealized gains from venture capital investments and slower depreciation of some data center equipment.
The company’s operating margin rose to 30% for the first time since it became part of the Alphabet name in 2015, even as its costs started to rise again. Alphabet in 2020 suffered its weakest sales growth in 11 years, but posted a record profit and increased cash flow by US $ 17 billion after slowing hiring and construction.
Alphabet’s board repurchase authorization follows a US $ 25 million buyback program announced in 2019. Jefferies analyst Brent Thill estimates that Alphabet now has $ 56 billion. US dollars to spend to buy its shares.
It wasn’t immediately clear which industries were driving Google’s growth in ad and cloud sales.
The increase in ad purchases by travel and entertainment companies would be a positive sign, as hotel reservation services and movie studios are among Google’s biggest spenders.
The advertising business of Google, the global market leader in terms of sales, accounted for 81% of quarterly revenue, up from 82% a year ago.
The operating loss of Google Cloud, a distant rival to the cloud businesses of Amazon.com and Microsoft, fell 44% to $ 974 million in the first quarter.
Google’s new mainstream subscription companies, such as an ad-free version of YouTube, could also grab the attention of analysts.
Alphabet shares jumped 80% last year, 184th among companies in the S&P 500 Index.
Privacy and antitrust lawsuits against Google that could lead to changes in its advertising operations remained a concern for investors, analysts said. But the resolution remains distant, with a key test expected before 2023.
The latest dispute emerged on Monday when streaming technology company Roku Inc accused Google of engaging in anti-competitive behavior for the benefit of its YouTube and computer hardware businesses.
Discussions over changing US and EU laws to impose new oversight on Google, Facebook Inc and other companies, especially around privacy and artificial intelligence, have been delayed as lawmakers have been distracted by the pandemic.
Shares of Facebook, which had risen 62% in the past year as of Tuesday, rose 1.7% after-hours. Shares of Amazon, another big advertising competitor, rose 0.2% after Alphabet’s results and 44% in the last year.