Google parent Alphabet Inc reported a jump of 36% in the fourth-quarter profit quarterly to surpass expectations courtesy of a surge in the internet advertising business.
Alphabet is the largest search and video ads provider in the world. Strong cloud businesses and Google servers drove the high-profit growth. More consumers used Google search in 2021 to shop online, and advertisers reacted by increasing their marketing budgets.
The reported results reinforce a global trend towards a digital economy that shields large companies against small-market shocks.
Chief executive of Alphabet Sundar Pichai said that “a deep investment in artificial intelligence technologies continues driving helpful and extraordinary experiences for individuals and businesses across our products.”
Alphabet Growth Statistics
Alphabet shares rose by over 8 percent in after-hours trading that also rose on the announcement by the company that it will undertake a stock split of 20-to-one.
The quarterly profit was $20.6 billion, translating to $30.69 per share. The profit marked the fourth quarter of record profits and beat an expectation of $27.56 a share. Alphabet’s investment in startups contributed to the profit jump. In addition, extending the useful life of networking gear and servers gave the company a $2 billion boost.
Alphabet’s sales in the fourth quarter rose by 32% to 75.3 billion. The sales rise is the third straight record surpassing an average estimate of $72 billion by financial analysts.
The company’s cash hoard grew by almost $3 billion to $ 139.6 billion in 2021. Another $50 billion went to buying back of shares.
Alphabet also achieved a quarterly sales record for its Google Pixel smartphones during the holiday season, although Pichai complained about “extremely challenging supply constraints.” The company launched two Pixel smartphones and gained some market share from Apple and Samsung.
Google Contribution to Unprecedented Growth
Google secondary businesses assisted in lifting overall sales. Advertiser spending and a robust consumer online activity contributed to impressive fourth-quarter results. More consumers turned to Google search during the Covid-19 pandemic to shop for various items. Google’s chief business officer said that retail, finance, travel, and entertainment advertisers increased their marketing budgets.
Google’s advertising business in 2020 and 2021 accounted for 81 percent of Alphabet’s revenues. Alphabet CFO Ruth Porat acknowledged the double-digit growth in the fourth quarter was a reflection of “strength in advertiser spending, online consumer activity and revenue growth from Google cloud.”
Google Cloud increased quarterly revenue to $5.5 billion to surpass the estimated $5.4 billion.YouTube added over $8.6 billion to Alphabet’s revenue.
Alphabet employs 156,500 worldwide, but nearly 46% of the fourth-quarter revenue came from the US market.US generated $34.7 billion. The company earned 30.7 % of total sales ($23.2 billion) from Europe, Africa, and the Middle East.