Alphabet (GOOGL) continued its track record of beating expectations when it reported December quarter earnings after the close on Tuesday. Google's parent company smashed expectations.
6:07 PM ET: Alphabet's call has ended. Shares are up 8.86% after-hours to $3,001.84 after the company smashed Q4 estimates, showing strength of ad business.
During the conference call to present the results, the company's leaders expressed their optimism for 2022, despite the economic difficulties caused by the ongoing Covid-19 pandemic.
Alphabet expects to hire heavily this year and intends to play a role in Blockchain and Web3 technologies, the buzzwords in the tech world. The group will also focus on its Google Cloud division and still relies on advertising to continue to generate profits.
The company managed to beat analyst estimates in nearly every business unit, including search ads, cloud computing and its 'other bets' that includes hardware and app store sales.
5:37 PM ET: A question on Youtube and the creator economy
Pichai: We are seeing tremendous traction in YouTube across newer areas of the podcasts, gaming, learning sports, and so across all these areas, you know, we'll kind of take a vertical specific look and see how we can support creators better.
5:35 PM ET: A question on headcount
Porat: we're excited about the opportunities ahead of us in you know, in particular, Google services Google Cloud, we're adding we intend to ensure we have the scale that we need to execute well, and so we're continuing to hire as I said, the majority were again, in technical roles and really pleased with the opportunities we see ahead.
5:34 PM ET: On Web3 and investments
Pichai: we are definitely looking at blockchain and it's such an interesting and powerful technology with broad applications. So much broader again, than any one application so as a company, we're looking at how we might contribute to the ecosystem and add value.
So we'll we'll definitely be watching the space closely and supporting it where we can overall I think, technology will continue to evolve and innovate and, you know, we want to be pro innovation and approach it that way.
5:33 PM ET: A question about Web3, the next iteration of internet, and investments
Pichai: AR is a big one. We've been investing there for a long time and will continue to play a role and it's something both not just at the computing layer, the services layer.
Alphabet's executives are responding to questions from analysts.
5:27 PM ET: Capex will increase "meaningful" in 2022, CFO Ruth Porat said.
5:26 PM ET: Alphabet continues to hire: the company added nearly 6500 people in the fourth quarter, and the majority of hires are for technical roles. "We continue to attract great talent and expect a strong pace of hiring in 2022 across alphabet," CFO Ruth Porat said.
5:25 PM ET: Alphabet expects foreign exchange to "be a headwind", CFO Ruth Porat said.
5:24 PM ET: CFO Ruth Porat on Outlook for Google Cloud:
"While cloud operating loss and operating margin improved in 2021. We plan to continue to invest aggressively in cloud given the sizable market opportunity we see. We do remain focused on the longer term path to profitability, and over time operating loss and operating margin should benefit from increased scale at the alphabet level in the first quarter."
5:23 PM ET: CFO Ruth Porat on Outlook for Other bets, which includes the company’s self-driving car unit Waymo and life sciences unit Verily.
"Within other revenues, we are pleased with the momentum from pixel six and pixel six pro reflected in our hardware revenues in the fourth quarter. As a reminder, hardware revenues in 2021 also reflected the acquisition of Fitbit which we lapped a couple of weeks ago."
5:22 PM ET: CFO Ruth Porat on Outlook for Google Services:
"For Google services. We are very pleased with our year on year revenue growth in Q4. And for the full year 2021 which continued to be driven by broad based advertiser strength and strong consumer online activity. The year on year growth rate also reflected a benefit from lapping COVID related weakness in 2020, which obviously will not be a factor in 2022".
5:13 PM ET: Waymo, the company autonomous unit, is making progress, according to Pichai. Waymo will develop "partnerships with key industry players."
"October marked the one year anniversary of our Waymo, one fully autonomous commercial ride hailing service in Arizona. In San Francisco, hundreds of riders are using Waymo as part of our Trusted Tester Program."
5:12 PM ET: Google Cloud's growth "comes from many leading businesses including Albertsons and LVMH,", said CEO Sundar Pichai.
5:09 PM ET: CEO Sundar Pichai on Pixel: "In Q4 we set an all time quarterly sales record for pixel. This came in spite of an extremely challenging supply chain environment," he said.
5:07 PM ET: CEO Sundar Pichai is very bullish on Youtube.
"We are also seeing exciting momentum with YouTube. YouTube shots continues to drive significant engagement. We just hit 5 trillion all time views and have over 15 billion views each day globally. This is helping our Creator Community reach newer and bigger audiences. In fact, more people are creating content on YouTube than ever before. Last year, the number of YouTube channels that made at least $10,000 in revenue was up more than 40% year over year," he said in the earnings call. Here's the webcast, for those looking to tune in.
5:05 PM ET: "It's been a very strong quarter for ads," CEO Sundar Pichai said.
5:04 PM ET: "Our mission to organize the world's information and make it universally accessible and useful is as relevant today as it's ever been in 2022, we'll stay focused on evolving our knowledge and information products including Search, Maps and YouTube to be even more helpful. Investments in AI will be key, and we'll continue to make improvements to conversational interfaces like assistant," CEO Sundar Pichai said.
5:01 PM ET: Alphabet's call has started. CEO Sundar Pichai and CFO Ruth Porath are in the call.
4:58 PM ET: Alphabet's call should be starting in a few minutes. Here's the webcast link, for those looking to tune in.
The company also unveiled a 20-for-1 stock split: "If approval is obtained, each of the company’s stockholders of record at the close of business on July 1, 2022 (the “Record Date”), will receive, after the close of business on July 15, 2022, a dividend of 19 additional shares of the same class of stock for every share held by such stockholder as of the Record Date'" said Alphabet.
The internet giant reported earnings per share of $30.69 versus consensus expectations of $27.68, according to FactSet, while quarterly revenue of $75.3 billion beat estimates of $72.26 billion.
Google’s advertising revenue came in at $61.24 billion for the quarter, up from $46.20 billion the same time last year.
Here are key numbers:
Earnings per share (EPS): $30.69 vs $27.34 expected, according to FactSet
Revenue: $75.33 billion vs $72.26 billion expected, according to FactSet
YouTube advertising revenue: $8.63 billion vs. $8.87 billion expected, according to StreetAccount
Google Cloud revenue: $5.54 billion vs $5.47 billion expected, according to StreetAccount
Traffic acquisition costs (TAC): $13.43 billion vs. $12.84 billion expected, according to StreetAccount. Investors tend to focus on acquisition costs, TAC, at Google. Basically, the expenses made by Google to get people on its website and to keep them there. Analysts expect traffic acquisition costs to rise, but at a slightly slower pace than the company's revenue growth.
“Our fourth quarter revenues of $75 billion, up 32% year over year, reflected broad-based strength in advertiser spend and strong consumer online activity, as well as substantial ongoing revenue growth from Google Cloud. Our investments have helped us drive this growth by delivering the services that people, our partners and businesses need, and we continue to invest in long-term opportunities,” said Ruth Porat, CFO of Alphabet and Google.
Google Cloud unit, which is playing catch up with Microsoft and Amazon, posted an operating loss of $890 million, compared to a loss of $1,24 billion a year earlier. However it grew from Q3, which showed a $644 million loss.
Revenue for Other Bets, which includes the company’s self-driving car unit Waymo and life sciences unit Verily, came in at $181 million, down slightly from a year ago.
Google Services is the only division that posted a profit in the fourth quarter, with an opertaing income of $26 billion, up 35.6% from December 2020.
Luc Olinga, TheStreet’s tech Lead, will be live-blogging Alphabet’s earnings report, whoch is typically published at 4:15 P.M Eastern Time, along with an earnings call scheduled for 5 P.M. Eastern Time. Please refresh your browser for updates.
