Google’s parent company Alphabet has reported record revenues for the second straight quarter.
Cutbacks by travel and entertainment advertisers were more than offset by new spending from online retail clients and others during lockdown.
“Our strong fourth quarter performance, with revenues of US$56.9 billion, was driven by Search and YouTube, as consumer and business activity recovered from earlier in the year,” said Ruth Porat, CFO of Google and Alphabet in the financial statement. “Google Cloud revenues were US$13.1 billion for 2020, with significant ongoing momentum, and we remain focused on delivering value across the growth opportunities we see.”
Google’s advertising business, including YouTube, accounted for 81 per cent of Alphabet’s revenue in the fourth-quarter sales, up 23 per cent compared to a year ago.
Google Cloud sales were US$3.83 billion for the quarter, up 46 per cent from 2019.
In a new disclosure, Alphabet said Google Cloud posted an operating loss of US$1.24 billion in the fourth quarter and US$5.6 billion for 2020, a 21 per cent greater loss than in 2019.
Alphabet’s quarterly profit rose 43 per cent to US$15.2 billion, which prompted shares to increase six per cent to US$2,036 in after-hours trading on Wall Street. The stock has risen by 9.5 per cent this year. Google’s share price was US$820 in February 2017.
“Our strong results this quarter reflect the helpfulness of our products and services to people and businesses, as well as the accelerating transition to online services and the Cloud,” said Sundar Pichai, Alphabet’s CEO. “Google succeeds when we help our customers and partners succeed, and we see significant opportunities to forge meaningful partnerships as businesses increasingly look to a digital future.”
Nicole Perrin, eMarketer analyst said the company had beat expectations for two quarters in a row, suggesting that advertisers were continuing to spend more on digital advertising despite the slump in the second quarter of 2020 as the pandemic took hold.
“Again, all three of Google’s main lines of advert business outperformed our forecast, including YouTube, which grew by almost 46 per cent in the fourth quarter compared a year earlier, Google Network Member revenues, which were up almost 23 per cent, and search, which was up more than 17 per cent despite continuing low spending from travel advertisers, traditionally one of Google Search’s most important segments,” Nicole Perrin, eMarketer analyst told The Telegraph.
“The strength across all three areas suggests that advertisers are not only turning to digital video ads as a flexible and addressable way to reach consumers with sight, sound, and motion, but also to low-funnel performance ads as shoppers continue to rely on ecommerce during the pandemic.”
Technology companies Microsoft, Facebook and Apple also recorded record revenue in the latest reported quarter.