Alphabet Inc Class C (NASDAQ: GOOG) stock rose over 7.1% in the pre-market session of Feb 3rd, 2021 (Source: Google finance) after the company posted better than expected results for the fourth quarter of FY 20.
Advertising revenue for the fourth quarter came out to $46.20 billion, up 22% from $37.93 billion in the same quarter last year. That’s a sharp turnaround from Q2, when the onset of the Covid pandemic spurred advertisers to pull back on spending, causing an 8% annualized drop in ad revenue and Google’s first ever year-on-year revenue decline. YouTube ads, which brought in $6.89 billion in Q4, showed a 46% jump from this time last year when it earned $4.72 billion. YouTube is showing particularly strong growth in “direct-response” ads, which encourage consumers to take immediate action like download an app or buy something from an e-commerce site. Overall, the company has reported 43% rise in net profit to $15.2 billion. In addition, the backlog grew to nearly $30 billion, up from $19 billion in Q3, nearly all attributable to Cloud.
Meanwhile, Alphabet also declared that operating income from its cloud business for the first time has posted loss. The company lost $5.61 billion during the full year, and $1.24 billion during Q4, showing that the business is still in investment mode. By way of contrast, Amazon’s cloud business earned an operating profit of $13.53 billion last year and $3.56 billion last quarter. Google Cloud’s revenue grew 47% year over year. The company’s Other Bets segment, including life sciences unit Verily and self-driving unit Waymo, brought in $196 million in the fourth quarter and $657 million during the year. The segment showed operating loss of $4.48 billion in 2020. Google’s “Other Revenue” came in at $6.67 billion in Q4, up from $5.26 billion Q4 2019.
GOOG in the fourth quarter of FY 20 has reported the adjusted earnings per share of $22.30, beating the analysts’ estimates for the adjusted earnings per share of $15.90, according to Refinitiv. The company had reported the adjusted revenue growth of 23 percent to $56.90 billion in the fourth quarter of FY 20, beating the analysts’ estimates for revenue of $53.13 billion.
Meanwhile, Alphabet’s 2020 sales growth of 13% was the slowest increase since 2009 when it posted 8.5% growth. Still, matched with spending cuts, Alphabet increased its cash hoard by $17 billion in 2020 to $137 billion.