Last updated: 28 Oct, 2021 | 06:39 pm
Net Income rises: Alphabet has reported a 68.4% on year rise in Net income to $18.9 billion beating street estimates. The company had reported $11.2 billion in the same quarter last year. Sequentially net income rose 2.2% from $18.5 billion last quarter. Earning per share (EPS) came in at $27.99 per share, significantly higher than street estimates of $23.48 per share.
Revenue beats estimates: The revenue for the Q3 rose 41% on year to $65.12 billion beating analysts estimates of $63.34 billion. The revenue last year stood at $46.2 billion. Sequentially revenue rose by 5.2% from $61.9 billion.
Segment Revenue: Search has remained by far the biggest contributor to Alphabet's overall top-line growth, with the business unit growing 44% to bring in $37.9 billion in revenue in the third quarter before traffic-acquisition costs.
Google’s advertising revenue rose 43% to $53.13 billion, up from $37.1 billion the same quarter last year and slightly higher than the prior quarter. YouTube ads rose to $7.21 billion, up from $5.04 billion a year ago. Retail was the largest contributor to year-over-year ad growth.
Revenue in Google’s cloud division climbed 45% to $4.99 billion. Google Cloud is one of the tech giant's primary business segments and Alphabet has been investing heavily in this unit. The cloud segment provides developers with a highly scalable and reliable platform for building, testing, and deploying applications. It also offers workspace collaboration tools, including apps like Gmail, Docs, Drive, Calendar, Meet, and more.
Revenue in the Other Bets segment, which includes the self-driving car company Waymo, rose slightly to $182 million from $178 million.
Operating Income and margin: The operating income rose 87.6% on year to $21 billion from $11.2 billion in the same quarter last year. Sequentially operating income rose 8.6% from $19.4 billion last quarter. The operating margin increased by 8% to 34% from 24% in the same quarter last year. Traffic acquisition costs stood at $11.5 billion from $8 billion in the year ago quarter.
Other income: Alphabet reported a gain on investments of $188 million in the quarter, up from a gain of $26 million a year earlier. The company’s investment arms, which bet on start-ups at various stages, benefited from the IPOs of cloud software developer Freshworks and restaurant-tech vendor Toast.
Alphabet Q3 results review:
Alphabet has posted a strong set of numbers with top and bottom line beating street estimates. Alphabet has so far been the best performer this year among the 'FAANG' names (Facebook, Apple, Amazon, Netflix, and Alphabet’s Google) of Big Tech. Unlike many other technology companies, Alphabet has been viewed as a key beneficiary of the reopening trade, given it stands to gain from a pick-up in travel-related searches and advertising on Google Search.
Alphabet also repurchased $12.6 billion in shares in the last quarter. Google recently launched its line of Pixel 6 smartphones, which it hopes will help the company break out in the competitive consumer-electronics market amid supply-chain issues. The stock is up 58% this year, more than double the gains in the S&P 500, as investors bet on Google’s ability to pick up business as the economy reopens and to withstand potential regulatory changes.