Google Rides Global Ad Recovery to Record Revenue -- 2nd Update
03 February 2021 - 10:51AM
Dow Jones News
By Georgia Wells
Google rode a surge in online holiday spending to record revenue
in the fourth quarter, even though it disclosed for the first time
continued losses in its closely watched cloud division.
The internet titan's earnings, released Tuesday afternoon,
reflected a continuing recovery in global ad spending that took a
hit in early 2020 when people paused travel plans and other
purchases in response to the coronavirus pandemic.
Google parent Alphabet Inc. posted a record $56.9 billion
revenue, up from $43.2 billion a year ago. The company's
advertising units pulled in $46.2 billion, up nearly 22% from a
year earlier. Analysts had forecast $52.7 billion in revenue,
including $42.3 billion from advertising, according to FactSet.
Alphabet's profit also rose, to $15.7 billion, from $9.3 billion
a year ago. Analysts had expected $11.9 billion.
Ruth Porat, Google's financial chief, said the company's search
and YouTube units drove its performance in the quarter. "It was a
great end to a challenging year," she said.
YouTube revenue soared 46% in the quarter, as advertisers
flocked to the video-sharing platform amid the pandemic. The
company said the platform now reaches more users between the ages
of 25 and 49 than all cable networks combined.
Google also revealed details about the costs of its cloud
division for the first time. While that unit brought in $3.8
billion in revenue, overall it lost $1.2 billion in the fourth
quarter. This announcement will enable investors to better compare
the results of Google's cloud business with those of Amazon.com
Inc. and Microsoft Corp.
Meanwhile on Tuesday, Amazon named its cloud computing guru,
Andy Jassy, chief executive officer of its entire business, with
founder Jeff Bezos shifting to the role of executive chairman.
Analysts had expected Google's cloud business to bring in $3.83
billion in revenue, according to FactSet, compared with $2.61
billion a year ago. Alphabet CEO Sundar Pichai said that in 2020
Google Cloud signed more than three times the number of deals worth
at least $250 million as in 2019.
Google has managed to sign up big-name clients for its cloud
business.
On Monday, Ford Motor Co. said it had decided to use Google for
cloud services to help develop in-car features and manage the reams
of data streaming from its vehicles.
Alphabet shares jumped more than 7% in after-hours trading. The
stock has gained about 17% over the last three months, compared
with a roughly 22% gain in the Nasdaq Composite Index.
The strong holiday season also added to Alphabet's mountain of
cash, which now stands at $26.5 billion. Alphabet recorded a cash
position of $20.1 billion at the start of October.
Still, Google is facing growing challenges. A set of antitrust
lawsuits allege various abuses of its power over online commerce
and digital information. They say Google muscles out competitors
and sells out the users it claims to protect.
Consumers are also calling for more accountability about how
companies use their data. The company has said it plans to restrict
the use of third-party cookies in its Chrome internet browser. On a
call with analysts, Google's chief business officer Philipp
Schindler said the company would continue to adjust its policies.
"People are demanding greater privacy," Mr. Schindler said.
A small number of employees of Google have also formed a union.
They have said their efforts reflect a need for employees to be
able to speak out about the company without facing career
repercussions.
On Monday, the Labor Department said Google had agreed to pay
more than $3.8 million to resolve a case of hiring and pay
discrimination at several locations in California and Washington
state.
Google said it now has more than 135,000 employees.
Write to Georgia Wells at Georgia.Wells@wsj.com
(END) Dow Jones Newswires
February 02, 2021 18:36 ET (23:36 GMT)
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