Alphabet (GOOGL) Fourth Quarter 2021 Results

Google’s parent Alphabet reported better-than-expected earnings and revenue in the fourth quarter. Shares jumped more than 9% in extended trading.

The company also announced a 20-to-1 stock split that will go into effect in July.

Here are the key numbers:

  • Earnings per share (EPS): $30.69 vs $27.34 expected, according to Refinitiv
  • Income: $75.33 billion vs $72.17 billion expected, according to Refinitiv
  • YouTube ad revenue: $8.63 billion vs $8.87 billion expected, according to StreetAccount
  • Google Cloud revenue: $5.54 billion vs $5.47 billion expected, according to StreetAccount
  • Traffic Acquisition Costs (TAC): $13.43 billion vs $12.84 billion expected, according to StreetAccount

Alphabet recorded revenue growth of 32%, proving once again that it was able to withstand the pressures of the pandemic and inflation.

The results follow a year of outperformance. The stock jumped 65% last year, beating every other Big Tech company and more than tripling the gains of the S&P 500.

Google’s ad revenue was $61.24 billion for the quarter, up 33% from $46.2 billion in the same period a year earlier.

Philipp Schindler, chief commercial officer of Google, said retail was the biggest contributor to year-over-year advertising growth. Spending on media and finance was also significant.

YouTube ad revenue was the only metric that fell short of analysts’ expectations. The company attempted to challenge TikTok with a service called Shorts. Alphabet CEO Sundar Pichai said the company has more than 15 billion daily active views worldwide. This metric is unchanged since its last update in July 2021.

The company’s cloud saw revenue growth of 45% to $5.54 billion. Cloud operating loss was $890 million in the quarter, down from the loss of $1.14 billion a year ago. However, it increased from the third quarter, when the unit lost $644 million.

Alphabet’s backlog grew more than 70% to $51 billion, mostly comprised of cloud business, Pichai said on the earnings call. He added that the company had seen a 65% year-over-year growth in the number of cloud contracts worth more than $1 billion.

Revenue from the company’s Other Bets umbrella, which includes self-driving car unit Waymo and life sciences unit Verily, was $181 million, down slightly from a year ago. year.

Google’s other revenue segment, which includes YouTube’s hardware, Play Store and non-advertising revenue, saw sales of $8.16 billion, up from $6.67 billion a year earlier. Pichai said the company had achieved an “unprecedented sales record” for its Pixel smartphone despite supply chain constraints.

Traffic acquisition costs (TAC), the metric used to show how much the company pays other websites to acquire traffic, beat Wall Street expectations at $13.43 billion.

Google has added nearly 6,500 full-time employees to its workforce, Chief Financial Officer Ruth Porat said on the call. The total workforce is 156,500 full-time employees. Porat said the company expects the same pace of growth over the next several quarters.

In splitting its stock, Alphabet is tracking the moves of Apple and Tesla over the past two years.

The split does not change the fundamentals of the company. Rather, it will drive down the price of each share, a decision companies often make when their shares are trading in the thousands of dollars. If the split took place at Tuesday’s close, the cost of each share would drop from $2,752.88 to $137.64, and each existing holder would get 19 additional shares for each one they own.

Alphabet shares started the year in a tailspin, dropping 6.6% in January as Wall Street sold off its tech stocks. However, with the after-hours gain, Alphabet turned positive for the year.

Correction: An earlier version of this story incorrectly used the phrase daily active users instead of daily active views.

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