Alphabet inks fifth straight record-profit quarter

It's a good time to be in online ads, it turns out.

Alphabet, owner of Google and YouTube, has now turned out record profits for its fifth straight quarter, a 69% improvement from last year at $18.9 billion. Its revenue, $65.1 billion, is a 41% improvement on a year ago. Analysts had expected profits of just $15.8 billion and revenue of $63.2 billion, so Google trounced those predictions handily.

Figure 1: As easy as: Alphabet - parent company to Google and YouTube - reported its fifth straight quarter of profits.
(Source: Askar Karimullin / Alamy Stock Photo)

And it's adverts wot done it. These soared to $53.13 billion, from $37.1 billion last year. Some of this is even from traditional, old-school shops. "Bricks-and-mortar isn't dead," with retail advertising revenue up 40%, noted chief business officer Philipp Schindler.

Reopening shopping and travel have driven growth in search and, accordingly, advertisement. Searches like "open now near me" are four times higher than a year ago, notes Schindler. (Maybe less than surprisingly, since a year ago nothing was open near you.)

Ducking ad-mageddon, for now

Apple's iOS 14 privacy changes may be having less impact on Sundar Pichai's company, which after all owns its own operating system, Android. They had a "modest" impact on YouTube's revenue, says CFO Ruth Porat.

There was "a little bit of weakness" in YouTube ad revenue, argued CBNC's Arjun Kharpal on Twitter. But ads there still rose by a yearly 43% to $7.21 billion, though this was shy of analysts' loftier estimates. And with YouTube, alongside other platforms like Facebook, also attempting to copy TikTok's success in short video, YouTube Shorts "continues to see higher adoption rates" with a doubled average number of daily first-time creators, says Pichai.

Cloud, headed by former Oracle head of product development Thomas Kurian, is growing fast but still small pennies by comparison, with revenue there growing 45% to $4.99 billion. This is "above cloud overall", says Porat. It still trails Amazon and Microsoft in that space, and so unless it snaps up a major software-as-a-service company, Google "will fall short" of its aims back in 2019 to become a top-two cloud provider by 2023 or abandon the market altogether, says the analyst firm Forrester in a research note.

But even as the space's number three, Google will find cloud profitable and a help to its other businesses, thinks the firm. And in cloud, the company also pulled off a helpful trick in January extending the useful life of its data center servers. This padded its income by $1.7 billion.

Google goes green

With Google keen to prove its green bona fides in advance of a Cop26 summit where it is a corporate partner, its campuses and cloud services will by 2030 be run on carbon-free energy, says Pichai.

Google's cloud services will offer customers information on the carbon footprint of their cloud use. And Google Maps has now been updated in the US to offer an eco-option, with more fuel efficient routes to where they're going.

Meanwhile, for failing to delete content Russia objects to, Google paid Moscow a fine of more than 32 million roubles, it said on Monday (though this is only $455,079).

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But Pichai's company is looking to grow in India with the coming launch of the JioPhone Next, co-developed by Google and Reliance. Pichai views it "as laying the foundation" in pulling Indian first-time users into the smartphone market (and Android ecosystem), saying "over a three- to five-year time frame, it will end up having a lot of impact."

The made-for-masses smartphone will be powered by Pragati OS, based on Android, and launched in November in time for Diwali. A better choice anyway than Holi, since smartphones are not known to like paint.

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— Pádraig Belton, contributing editor special to Light Reading