Connect with us

Tech & Gadgets

Google Ads Boom, Online Shopping Drives Record Profits for Alphabet

Published

on


Google owner Alphabet reported higher-than-expected third-quarter ad sales on Tuesday, a sign that the business is crossing new boundaries of tracking mobile users and that online shopping is as popular as ever during the holidays. growing in season.

Through its search engine, YouTube video service, and partnerships on the Web, Google sells more Internet ads than any other company. Demand for its services grew over the past year as the pandemic forced people to spend more time online, and their new habits persisted.

Google advertising revenue grew 41 percent to $53.1 billion (approximately Rs 3,98,010 crore) during the third quarter. Alphabet’s total sales rose to $65.1 billion (about Rs 4,87,730 crore), higher than the average estimate of $63.3 billion (about Rs 4,74,250 crore) among analysts tracked by Refinitiv.

“The consumer shift to digital is real and will continue as we begin to see people return to stores,” said Philip Schindler, Google’s chief business officer. “The underlying takeaway is that people want more options, they want more information, more flexibility, and we don’t see that reversed.”

Shares fell 0.93 per cent to $2,760.19 (about Rs 2 lakh) after the financial results were released after hours.

Quarterly profit was $18.936 billion (approximately Rs 1,41,860 crore) or $27.99 (approximately Rs 2,100) per share, beating expectations of $24.08 (approximately Rs 1,800) per share and marking the third-straight quarter of record profit. Alphabet’s profit is subject to wide fluctuations because accounting rules require the company to measure unrealized gains from its investments in startups as income.

Investors had faced some sales challenges for Google.

Concern by consumers about how Google and other companies use their browsing behavior to profile them and then which ads to show has become widespread. In the latest challenge, Apple, whose iPhone devices account for half of smartphones in the United States, over the past few months gave its users more control to stop tracking. The change prompted advertisers to recalculate their spending in a way that Google rivals Snap, and Facebook said hurt their third-quarter sales.

regulatory scrutiny

Alphabet Chief Financial Officer Ruth Porat reported a “slight impact” on YouTube ad sales from Apple’s efforts. But analysts said Google overall was less affected than peers because its search engine collects data on user interests that is valuable to advertisers and unmatched in the industry.

“They’re almost completely immune to Apple’s changes,” said Colin Colburn, an analyst at tech consultancy Forrester.

Other companies also faced a slowdown as advertisers cut spending as they struggled to staff and stock shelves amid hiring and supply-chain issues brought on by the pandemic. Schindler said supply-chain challenges only affected sales of Google’s automotive ads.

Google Cloud, which lags behind Amazon and Microsoft in cloud services market share, grew revenue by 45 per cent to $4.99 billion (about Rs 37,400 crore), slightly lower than its estimate of $5.2 billion (about Rs 38,980 crore).

Alphabet’s overall costs rose 26 percent to $44.1 billion (approximately Rs 3,30,575 crore) in the third quarter and the company’s workforce size crossed 150,000 employees.

Alphabet’s shares have outperformed many larger peers since the end of last year, rising nearly 57 percent. Microsoft is up 39 percent, Facebook 20 percent and Amazon 2 percent over the same period.

But Alphabet’s shares trade at a slight discount compared to Facebook, the Internet’s No. 2 seller of online ads. Facebook is trading at 6.8x expected revenue over the next 12 months, compared to 6.4x for Alphabet.

Facebook has been flooded in recent weeks by allegations from a former employee who leaked thousands of company confidential files to the media and the US securities regulator over alleged misrepresentation of the company’s risks from hosting inappropriate content. Complaint was filed with

Google is stuck in some results. A YouTube policy official testified to the US Congress on Tuesday about the harms of social media to young users, along with other companies.

Investors await further changes to Google’s businesses as a result of regulatory scrutiny. US and other authorities allege that some of the company’s practices in advertising and search are competitive, although the company argues they are meant to benefit users. In a concession to critics last week, Google said it would cut some of the fees it collects from apps on its Play app store starting next year.

But the move could generate new revenue for Google if it starts selling subscriptions through its apps to companies like music streamer Spotify and gives Google 10 percent to 15 percent of the amount.

Alphabet’s Porat said on Tuesday that earlier cuts in play fees would cut sales.

© Thomson Reuters 2021


.

Copyright Indian Lekhak Limited 2021. All Rights Reserved