Shares of Google rose on the back of a strong quarter and significantly exceeded the expectations of Wall Street. Advertising revenues have shown a sharp increase after declining in the previous quarter. Signs of recovery are cause for optimistic expectations regarding the future quarter.
Shares of Google (GOOG, GOOGL), increased by 18.2% over the last 6 months, rose 9% in after-hours trading on Thursday after the global advertising giant reported significant improvements in reporting 3rd quarter.
Financial report parent company Google has significantly exceeded the expectations of analysts and showed the recovery of growth of advertising revenues, after the previous second quarter for the first time in its history, reported falling revenues. The situation was connected with the crisis of a pandemic COVID-19, when many advertisers, especially the tourism sector, reduced its costs.
The third quarter witnessed a recovery in the online advertising market, which also proved the company’s Snap (SNAP) and Pinterest (PINS), reporting growth of advertising revenues over the past 3 months to 30 September.
Market analysts noted that the success of the 3rd quarter, Google has been partly linked to the rise of political advertising ahead of the presidential elections in the United States on 3 November.
Google reported an increase in earnings per share by 62% (compared value) to $16,40 that is significantly above average analytical predictions of $11,29.
Total quarterly revenue rose to $11.2 billion by reducing some capital expenditures and staff costs. At the same time, the company warned that it plans to reduce its investment in the development of cloud business, highlighting it as a priority.
Total revenues increased by 14% to $46.17 billion, also above analyst expectations for $42,90 billion to See the quarterly history of revenue and profit Alphabet for the last 2 years can link.
80% of all revenues of the Alphabet, traditionally, came from advertising, amounting to $of 37.10 billion, higher compared to $33,80 billion a year earlier. Revenue growth of search engines was 6% and the strongest growth YouTube in 32% to about $5,04 billion, which is above estimated $4,39 billion
The number of paid subscriptions to music and paid premium services, YouTube has grown to more than 30 million, YouTube TV added more than 3 million subscribers.
The cost of traffic acquisition (TAC) totaled $8.17 billion, which beat analyst expectations of $7,66 billion.
Sales of cloud business Google Cloud brought $3.44 billion. what’s even better than Wall Street forecasts of $3.32 billion Alphabet declared that with the next financial quarter will begin to publish the earnings of its cloud unit, which will allow investors and analysts to “evaluate progress”.
Income of the 3rd quarter from the sale of equipment, including smart phones and column Pixel, amounted to $5.48 bn, compared to $4,05 billion a year ago.
The income of an unprofitable division, “Other articles”, which includes the company Autonomous driving Waymo and research company Life Sciences Verily, increased by $178 million, compared with $155 million a year ago, while losses amounted to $1.10 billion compared to $941 million a year earlier.
On the issue of the lawsuit of the Ministry of justice on charges of a Google monopoly power in the market of search advertising, the company has stated that it considers the charges “deeply flawed” and confidently “in significant benefits of their search engines for consumers.”
Executive Director of Google Sundar Pichai said on Thursday that the complaints in court would create “certainty, clarity and opportunity.”
Alphabet financial officer Ruth Porat warned investors that the tightening of quarantine measures during a pandemic COVID-19 can affect the demand of advertising. The company gave no forecast for the coming quarter.
