Google stock jumps 7% as company smashes earnings estimates
Google‘s parent company Alphabet has reported quarterly earnings that exceeded expectations, as the company raked in cash from online ad sales while facing lawsuits claiming it abuses its market power.
Alphabet stock rose nearly 7 percent in after-hours trading on Tuesday, as the company reported fourth-quarter revenue of $75.3 billion, versus the $72.2 billion expected on Wall Street.
Total Google revenue was $74.9 billion, above estimates of $71.652 billion.
Google generates more revenue from internet ads than any other company, but has been accused in court filings of deceiving advertisers and publishers to reap windfall profits.
Alphabet stock rose nearly 7 percent in after-hours trading on Tuesday, as the company reported fourth-quarter revenue of $75.3 billion
The company’s third-straight quarter of record sales reflects the growth of ad-laden Google services such as internet search, email and YouTube video streaming, since the pandemic made hybrid work customary across much of the world.
Google had said that during the third quarter it lost some sales because companies running low on product trimmed marketing and new iPhone privacy measures curtailed its ability to track users online.
The company also announced on Tuesday a 20-for-one stock split that would come in July if approved by shareholders.
In the fourth quarter, the company’s advertising revenue rose 32.5 percent to $61.2 billion, compared with the average estimate of $57.1 billion.
Top rival Meta Platforms Inc, owner of Facebook, reports financial results on Wednesday, including for the first time a breakdown of how its Reality Labs unit is faring compared with its advertising business.
Others including Amazon and ByteDance’s TikTok have been taking small pieces of Google’s share of the global advertising market.
Though market forecasters expect the trend to continue over the next few years, they do not expect major slippage in Google’s leading position. Google’s secondary businesses, including Cloud, also have been lifting overall sales.
Alphabet CEO Sundar Pichai is seen above. The company’s third-straight quarter of record sales reflects the growth of ad-laden Google services
Google sign at Google’s headquarters in Silicon Valley. Google generates more revenue from internet ads than any other company
Google Cloud, which trails Amazon and Microsoft Corp in cloud services market share, increased revenue by 45 percent to $5.5 billion, above estimates of $5.4 billion.
Alphabet also reported a quarterly sales record during the holiday season for its Google Pixel smartphones despite supply constraints.
Alphabet’s quarterly profit was $20.6 billion or $30.69 per share, beating expectations of $27.56 per share and marking a fourth-straight quarter of record profit.
Alphabet’s profit benefits from unrealized gains from its investments in startups, and the company also got a boost last year from extending the useful life of its servers and networking gear.
Last month, court filings were unsealed alleging that Google manipulated online advertising markets to its own benefit.
The damning claims in lawsuit led by the Texas attorney general accuse the search giant of running a digital advertising monopoly that increased the cost to advertisers and harmed ad industry competitors and publishers.
This graphic explains allegations that the Bernanke program caused AdX to drop the second bid from the auction and lower publisher earnings. Google is said to have retained the difference before adding it to a ‘pool’ to use it to inflate other bids. In this example, the advertiser pays $18, the publisher receives $7.20 ($9 minus Google’s 20% fee), and Google puts the remaining $18 – $9 = $9 into a pool to spend on other auctions
A Google spokesman dismissed the allegation as false and said the lawsuit in question was ‘full of inaccuracies and lacks legal merit.’
Numerous lawsuits accusing Google of anticompetitive conduct in the advertising and mobile app store markets continue to be one of the biggest challenges facing the company.
Google already has said its efforts to lower Play app store fees to assuage some of the concerns will hurt revenue.
Lawmakers in both the U.S. Senate and House of Representatives are considering a long list of bills aimed at reining in Google and the other tech giants, but none have become law.
One of the bills, which would stop the companies from giving preference to their own businesses, passed the Senate Judiciary Committee in January.