Google Owner Alphabet and its Phenomenal Results

Google parent Alphabet Inc on April 27 reported record profit for the second quarter in a row. The tech giant reported huge beats on its top as well as bottom lines for its first quarter of 2021, and a new $50 billion stock buyback. The share repurchase permission by Alphabet’s board follows a $25 billion buyback program announced in 2019.

The company also warned a surge in usage, as well as ad sales during the pandemic, may slow as people resume in-person activities.

Google ads sales jumped 32% in the first quarter compared with a year ago, and it even surpassed expectations. Cloud sales rose 45.7%.

The results from the first quarter provided the first signs that Google services may hold to gains made since lockdowns. Alphabet’s overall quarterly sales rose 34% and reached $55.3 billion, and quarterly sales surpassed analysts’ estimate of 26% growth from a year ago. Revenue benefited by an unspecified amount from Google’s acquisition of Fitbit in 2021.

Alphabet’s quarterly profit reached $17.9 billion, or $26.29 per share, and topping its previous best result which was $15.2 billion. Nevertheless, almost $4 billion of earnings came from unrealized gains in venture capital investments as well as  recalculating depreciation of some data center equipment.

The robust sales pushed operating margins up to 30% for the first time since incorporating as Alphabet six years ago. Even though its costs began to pick up again for hiring, legal matters, as well as building out new facilities. Last year, Alphabet suffered its worst sales growth in 11 years but posted record profit. The company also increased its cash hoard by $17 billion after slowing hiring and construction.

Google, various divisions, and risk factors

Google’s ad business accounted for 81% of Alphabet’s first-quarter revenue. Technology, as well as consumer product companies, were among big search advertisers in the first quarter.

YouTube ads came in at $6.01 billion during the quarter, as the video platform gained popularity in the U.S. The number of U.S. adults who used YouTube increased from 73% in 2019 to 81% in 2021.

Google Cloud narrowed its operating loss to 44% to $974 million in the first quarter of the year.

Several concerns regarding Google’s long-term prospects emerged in recent years, but none of them created serious issues. It could take years to decide the fate of privacy and antitrust lawsuits against the tech giant that could result in changes to its ad operations.