Google sees strong gains in advertising revenue during the third quarter
Google parent Alphabet released its third-quarter earnings results this afternoon. During the period from July through September, Google Search (& other) generated $37.93 billion in ad revenue, a 44% year-over-year gain. YouTube ads rose from $5.04 billion to $7.21 billion for a 43% annual gain.
Including a 40% hike in Google Network advertising revenue year-over-year to $8 billion, total advertising revenue for quarter three came to $53.13 billion compared to $37.10 billion for the same quarter in 2020. That works out to a 43% hike. Google Services took in nearly $60 billion in revenue compared to $42.57 billion last year for a 41% increase.
Google topped Wall Street estimates by reporting earnings per share of $27.99
Alphabet reported total revenue of $65.11 billion during the third quarter, up 41% compared with the $46.17 billion announced for the third quarter of 2020. Net income rose 88% from last year's $11.21 billion to this year's $21.03 billion. Earnings per share (EPS) came in at $27.99 vs. the expected figure of $23.48, 19.2% above the consensus figure.
Alphabet's stock price over the last year
Sundar Pichai, CEO of Alphabet and Google, commented on the report by stating, "Five years ago, I laid out our vision to become an AI-first company. This quarter’s results show how our investments there are enabling us to build more helpful products for people and our partners. Ongoing improvements to Search, and the new Pixel 6, are great examples. And as the digital transformation and shift to hybrid work continue, our Cloud services are helping organizations collaborate and stay secure."
Alphabet and Google CFO Ruth Porat also tossed in her two cents. She said, "Our consistent investments to support long-term growth are reflected in strong financial performance, with revenues of $65.1 billion in the quarter. We continued to deliver across our business by providing helpful and valuable experiences for both consumers and our partners." She also said that Apple's App Tracking Transparency feature had a "modest impact on YouTube revenues."
Results from the release of the Pixel 6 and Pixel 6 Pro won't be found in today's report but will be part of Google's fourth-quarter numbers. Google did have to spend $3.3 billion more to acquire customers in the quarter, a 41% hike over the amount spent last year. And the Alphabet subsidiary added nearly 18,000 employees or 13.6% bringing the company's headcount to 150,028 employees.
During the regular trading session, Alphabet shares (GOOG) rose $17.98 or .65% to close at $2,793.44. But after the earnings report was announced, the shares declined $10.44 or .37% in after-hours trading to $2,783. Porat stated that "focusing on privacy has been core to what we’ve been doing consistently." Meanwhile, Alphabet shares are up 58% this year, twice the gain recorded by the S&P 500.
Google is accused of manipulation and collusion when it comes to its advertising business
Google remains under pressure from the Justice Department and several state attorneys general over antitrust charges. Google is also accused of using manipulation and collusion to run its advertising business. The company responded on Bloomberg by stating, "In reality, our advertising technologies help websites and apps fund their content, and enable small businesses to reach customers around the world. There is vigorous competition in online advertising, which has reduced ad tech fees, and expanded options for publishers and advertisers."
A 173-page court document accuses Google of some rather slimy behavior and says that the company's Accelerated Mobile Pages (AMP), which are optimized to load faster, actually load slower than other optimization practices. Reportedly, Google held secret meetings with competitors like Apple and Microsoft, and punished people who logged out of the Chrome Browser by logging them out of YouTube, Gmail, and other sites as well.
The government alleges that Google has violated the Sherman Antitrust Act of 1890. Will Google end up with a mere slap of the wrist, or will the U.S. government make Google accountable for what many consider to be shady advertising practices?
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