Google parent company sees record quarterly profit backed by retail advertising | Business and Economic News
As consumers spend more time online during the pandemic, retailers have been struggling to contact them.
Google’s parent company Alphabet Inc’s quarterly revenue and profits soared to record highs, and the company reported on Tuesday that as more consumers shop online, advertising spending has increased.
After the results were announced, the share price of Alphabet, the world’s largest search and video advertising provider, rose 3.3% in after-hours trading, easily exceeding analyst expectations. Facebook’s stock price rose 1.3%. The company competed with Google in online advertising sales and announced its own results on Wednesday.
Overall, this is a glorious day for large US technology companies-Apple and Microsoft have also announced record earnings.
As consumers spend more time online during the coronavirus pandemic, retailers have been struggling to contact them, whether they use Google search to buy products or watch videos on YouTube. With the introduction of vaccines and relaxation of restrictions, the initial rebound in the US economy is also helpful, as consumers are enjoying more liquidity and various purchasing options.
Alphabet CEO Sundar Pichai has identified e-commerce as a major growth area for the Internet giant. He deepened the company’s relationship with Shopify to strengthen its commercial efforts while continuing to chase Amazon. The subsidiary YouTube also joined in. The world’s largest video platform acquired Simsim, an Indian company earlier this month, to further deepen the video business.
WPP Mindshare Chief Digital Officer Tom Johnson said: “Alphabet benefits from the general return of advertising expenditure to the market, especially the balance of returns. It focuses more on digital channels rather than pre-pandemic.”
Alphabet said that as of the second quarter on June 30, Google’s advertising revenue increased by nearly 70% to 50.44 billion U.S. dollars.
Philip Schindler, Google’s chief business officer, said in a conference call with analysts that retail brands are the biggest contributor to the growth of the advertising business. He added that the tourism, financial services, and media and entertainment industries also performed strongly.
The company’s streaming video platform YouTube’s advertising revenue increased by 83.7% from the same period last year, reaching 7 billion US dollars-almost the same as Netflix’s quarterly revenue.
Nicole Perrin, principal analyst at eMarketer of Insider Intelligence, said that the results “exceeded our expectations in all three aspects of Google’s advertising business: search, the Google network, and YouTube.” “YouTube was the fastest-growing segment of the quarter, indicating that video The continued advantage of advertising in direct response and brand goals.”
Refinitiv’s IBES data shows that Alphabet’s total revenue increased by 61.6% to 61.88 billion U.S. dollars, much higher than Wall Street’s estimate of 56.16 billion U.S. dollars.
The quarterly profit was US$18.5 billion or US$27.26 per share, which exceeded expectations of US$19.34 per share.
Google Cloud, which lags behind Amazon and Microsoft in market share, narrowed its operating loss to $591 million in the quarter.
The strong performance coincided with Alphabet facing four antitrust lawsuits filed by US federal regulators or states, which may force major changes in its entire business, including advertising and smart home gadgets.
Recently, 37 state and local attorneys general in the United States earlier this month accused Google of “illegal” maintaining its monopoly on the Android mobile application store. These lawsuits are expected to take several years to resolve.