Alphabet Inc and its Google unit on Tuesday reported higher-than-expected fourth-quarter sales as the search-engine giant’s internet advertising and cloud computing businesses benefitted over the holiday season from the growing surge in online shopping.
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 coronavirus pandemic made hybrid work and e-commerce customary across much of the world.
In the fourth quarter, internet search advertising revenue came in above expectations. But Google’s cloud-computing unit and YouTube ad revenue slightly missed estimates.
YouTube ad revenue was the only metric that fell short of analysts’ expectations. The company has been trying to challenge TikTok with a service called Shorts. Alphabet CEO Sundar Pichai said the company has more than 15 billion daily active users, globally. That metric is unchanged from his last update in July 2021.
Alphabet’s Google Cloud growth has also been in the spotlight, as the company continues to plow money into the platform in an effort to steal market share from Amazon’s AWS and Microsoft’s Azure cloud services.
Internet search and other revenue rose 36% to $43.30 billion vs. estimates of $40.95 billion. Google said cloud-computing revenue rose more than 44% to $5.54 billion vs. estimates of $5.57 billion. Google cloud cut its operating loss to $890 million, missing estimates of a $758 million loss.
While tech sector stocks have been especially volatile lately, shares of Alphabet have easily out-performed competitors’ stocks.
Alphabet reported revenue growth of 32%, proving again that it was able to withstand the pressures from the pandemic and inflation.
Google’s advertising revenue came in at $61.24 billion for the quarter, up 33% from $46.2 billion in the same period a year earlier.
Alphabet’s backlog increased more than 70% to $51 billion, primarily consisting of the cloud business, Pichai said on the earnings call. He added that the company saw 65% year-over-year growth in the number of cloud deals worth over $1 billion.
Google added nearly 6,500 full-time employees to its headcount, CFO Ruth Porat said on the call. The total headcount sits at 156,500 full-time employees. Porat said the company expects that same pace of growth in future quarters.
GOOGLE Stock Split
The split doesn’t change the fundamentals of the business. Rather, it will lower the price of each share, a move that companies often make when their stock trades in the thousands of dollars. Were the split to happen as of Tuesday’s close. The cost of each share would go from $2,572.88 to $128.64, and each existing holder would get 19 additional shares for every one they own.
Alphabet shares started the year in a tailspin, dropping 6.6% in January as Wall Street sold out of tech stocks. However, with the after-hours gain, Alphabet has turned positive for the year.