Google<\/a> parent Alphabet<\/a> Inc reported record quarterly sales that topped expectations on Tuesday, as its internet<\/a> advertising business surged on consumers using Google search<\/a> as they shopped online and advertisers upping their marketing budgets.
Alphabet's shares jumped more than 8% in after-hours trading, also rising on the company's announcement that it would undertake a 20-to-one stock split.
The results were the latest to reinforce that the global trend toward a more digital economy has made Big Tech companies<\/a> resistant to small-market shocks. While concerns about rising inflation, COVID-19 variants and supply-chain shortages have rattled Wall Street and hurt sales at some businesses, the companies that control key gateways to e-commerce https:\/\/www.reuters.com\/world\/us\/us-holiday-sales-endure-supply-chain-omicron-snags-hit-887-bln-nrf-2022-01-14, hybrid work https:\/\/www.reuters.com\/business\/corporate-america-revamps-back-to-office-plans-omicron-threat-2022-01-11 and streaming entertainment have not seen a dip since the early days of the pandemic.
Alphabet's sales jumped 32% to $75.3 billion in the fourth quarter, for a third straight quarterly sales record and topping the average estimate of $72 billion among financial analysts tracked by Refinitiv.
Consumers dove into Google search looking for apparel and hobbyist items, while retail, finance, entertainment and travel advertisers raised marketing budgets, Google's chief business officer, Philipp Schindler, said on an earnings call.
Analysts said Google, which generates more revenue from internet ads than any other company, is proving that its growth is unstoppable for the foreseeable future.
\"The pandemic has handily accelerated the world's reliance on digital advertising,\" said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown. \"Sitting through traditional TV advert breaks or reading billboards suddenly feels completely archaic in the age of streaming and mobile phone addiction.\"
Shares of Alphabet rose 8.6% in after-hours trading, to $2,990.10, erasing their losses for the year-to-date. Shares of competitors in online ads including Facebook owner Meta Platforms Inc, Twitter Inc, Trade Desk Inc and Snap Inc all rose as well.
Under the planned 20-for-one stock split, investors as of July 1 will receive 19 additional shares for each one held. The split, which is subject to shareholder approval, will make the stock more affordable and potentially eligible for inclusion in more market indexes.
Shares of Apple Inc<\/a> and Tesla Inc<\/a> rallied in 2020 after splits, but increasingly brokerages such as Robinhood Markets allow purchases of fractional shares, diminishing some benefit of the tactic.
BANNER YEAR
For the 2021 full year, Alphabet's sales rose 41% to a record $258 billion. Sales had grown just 13% in 2020, the slowest rate in over a decade, after advertisers slashed spending in the first few weeks of the pandemic.
Across both 2021 and 2020, Google's advertising business, including YouTube, accounted for 81% of Alphabet's revenues.
Companies including Amazon.com Inc and ByteDance's TikTok have been taking small pieces of Google's share of the global advertising market. But market forecasters do not expect major slippage in Google's leading position. Google's secondary businesses, including Cloud<\/a>, also have been lifting overall sales.
Google Cloud, which serves clients such as online shopping software maker Shopify Inc, increased quarterly revenue by 45% to $5.5 billion, above estimates of $5.4 billion.
The division's operating loss narrowed by 45% to $3.1 billion in 2021.
Alphabet Chief Executive Sundar Pichai<\/a> told analysts that Cloud is exploring how to support clients that want to use blockchain, one of several emerging technologies that proponents view as crucial to kickstarting a new era of online innovations.
Alphabet also reported a quarterly sales record during the holiday season for its Google Pixel smartphones, despite what Pichai called \"extremely challenging\" supply constraints.
Alphabet's quarterly profit was $20.6 billion, or $30.69 per share, beating expectations of $27.56 per share and marking a fourth straight quarter of record profit. The profit benefited from unrealized gains from Alphabet's investments in startups, and the company also got a $2 billion boost last year from extending the useful life of its servers and networking gear.
For the 2021 year, Alphabet's profit increased 89% to $76 billion.
Alphabet's total costs in 2021 increased 27% to $178.9 billion as the company began to resume its pre-pandemic pace of hiring and construction. The company also noted increased legal fees, costs from a one-time bonus of $1,600 to all employees https:\/\/www.reuters.com\/article\/google-bonus-idCNL4N2ST4F5, and a rise in charitable contributions as it matched increased giving by employees.
Numerous lawsuits accusing Google of anticompetitive conduct in the advertising and mobile app store markets continue to be one of the company's biggest challenges. Google already has said its efforts to lower Play app store fees to assuage some of the concerns will hurt revenue.
Alphabet's cash hoard grew by nearly $3 billion in 2021 to $139.6 billion, with another $50 billion going to buying back shares.
The operating loss for Other Bets, a unit that includes self-driving technology company Waymo and other non-Google ventures, was $5.3 billion in 2021, widening from $4.5 billion in 2020. The company offered no 2022 financial outlook for the unit.
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