These days, there is so much uncertainty surrounding Google’s parent company, Alphabet: a global pandemic, fears of inflation gripping the U.S. economy, restive employees challenging management, and regulators and politicians seemingly bent on taking their pound of flesh.
But one thing has not changed. Alphabet continues to make money. Lots of it.
On Tuesday, Alphabet reported a 36 percent increase in profit, to $20.64 billion, in the last three months of 2021 on revenue of $75.32 billion, up 32 percent from a year earlier. The earnings were above analysts’ estimates of $19 billion in profit and $72.3 billion in revenue, according to data compiled by FactSet.
Alphabet shares jumped 8 percent in aftermarket trading from a closing price of $2,752.88. The company also announced plans for a 20-for-1 stock split — a move that is usually cheered by the market because it makes each share more affordable.
Five days after Apple posted a record quarterly result, Google’s blockbuster earnings were more proof that the tech giants continue to make massive profits in the face of supply chain constraints, concerns about inflation and a prolonged pandemic.
Google’s strong results were a reminder of the underlying power of its business and how, regardless of the circumstances surrounding it, the company will continue to thrive as long as people are active on the internet.
Google search remains the preferred on-ramp to the internet. YouTube is an essential online destination for entertainment, information and music. While it lags Amazon and Microsoft, Google is well positioned to capitalize on the seismic shift of businesses outsourcing technology infrastructure to the cloud.
With a firm foundation, Google has made slight tweaks to fortify its strongholds.
The company has made changes to how it allows retailers to list products in an effort to entice more users to start on Google or YouTube when shopping online. In a recent survey, Morgan Stanley found that the percentage of people starting shopping searches on Google and YouTube had increased since May, while the percentage of Amazon Prime users starting searches on Amazon had decreased.
While Facebook and other internet companies felt the sting of tighter privacy controls implemented by Apple on its devices, Google’s advertising business, which includes ads on YouTube, continued to expand, growing 32 percent in the quarter, to $61.2 billion.
YouTube has introduced short — less than 60 seconds — videos to rival TikTok and appeal to a younger audience. Google said it has more than tripled the number of salespeople at its Cloud unit since 2019 as part of a push to expand into new industries and forge partnerships. Google Cloud revenue rose 45 percent, to $5.5 billion, while the unit’s losses narrowed to $890 million, down from a loss of $1.24 billion a year earlier.
Google said it hired 6,500 employees during the quarter, raising its total head count to 156,500 people. Ruth Porat, Alphabet’s chief financial officer, said she expected the “strong pace of hiring” to continue in 2022.
She also noted that she expected a “meaningful increase” in capital spending this year, including the cost of building or retrofitting office buildings.
On a conference call, Sundar Pichai, Alphabet’s chief executive, took a question about potential antitrust legislation being discussed in Congress. Mr. Pichai said he was concerned the proposals could “break” a wide range of Google services and hurt the company’s ability to protect users.
He also echoed an argument made by Meta, the parent company of Facebook, that the proposals targeting Big Tech “can hurt American competitiveness” because they could disadvantage U.S. companies.