Google’s continued rebound in ad spending boosts revenue for Alphabet

Google ads gain fuels earnings for parent company Alphabet

Mountain-View, California-based Google’s parent company, Alphabet Inc, on Tuesday, October 27, 2021, had reported the profits and earnings for the September ending third-quarter earnings that have topped its analysts’ estimates. The company’s share price changed after this report came out. 

A continued rebound in digital ad spending at Google drove its parent company’s profit up 68 percent in the third quarter. It earned $18.94 billion, or $27.99 per share, in the July-September period. Revenue rose from 41 percent to $65.12 billion.

Advertising Revenue Rise

Analysts polled by FactSet had expected earnings of $23.73 per share on revenue of $63.53 billion. The shares slipped 1.7 percent to $2,740 in after-hours of trading. Google is the world’s controlling search engine, which owns the biggest mobile operating system in Android. It also runs the behemoth video site YouTube. Google said its profit for the quarter has benefited from an accounting change related to the depreciation of its servers and network equipment, which increased net income to $460 million.

Google’s advertising revenue rose by 43% to $53.13 billion, up from $37.1 billion the same time last year and slightly higher than the prior quarter. The YouTube ads rose to $7.21 billion, up from $5.04 billion a year ago. The advertising business, which is the company’s core, increased by 43 percent to $53.13 billion. YouTube’s ads alone jumped 43 percent, to $7.21 billion, and the cloud-computing business climbed 45 percent to $4.99 billion. 

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The company’s ad business, led by Search, Maps, and YouTube, posted about $53.13 billion in sales from advertising, with a 43% increase. Much of the company’s growth comes from the advertisements on e-commerce which are eager to reach its customers, whose product searches begin online. The effort to enlighten its e-commerce segment has helped turn retail ads into Google’s most significant growth contributor.

Demands for the Google services surged during the pandemic forced people to spend most of their time online, and thus, their habits are still persistent.

Gain in the investments

Alphabet reported again in the company’s investments of about $188 million in the quarter, which uprose from a gain of $26 million a year earlier. The company’s investment arms, which also invest in the start-ups at various stages.

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 This has benefited from the IPOs of cloud software developer, Freshworks and restaurant-tech vendor, Toast. The company had added about 6,000 employees in its third quarter and has expected a vigorous growth in the fourth quarter.

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