Alphabet Crushes Second Quarter Profit Estimates as Google Cloud Slashes Losses and Grows 54%

Today, after the bell amid a flurry of earnings reports from major tech companies, Alphabet reported its own performance in the second quarter. The search and services company posted revenue of $ 61.9 billion in the June 30, 2021 quarter, net income of $ 18.5 billion, and earnings per share of $ 27.26. Those numbers translate into 62% top line growth and 166% net revenue expansion. Naturally, Google is currently comparing itself to pandemic-hit second-quarter 2020 results, but its gains are remarkable regardless.

The Android maker’s results exceeded expectations, with the street just waiting Google’s parent company will post $ 56 billion in total revenue and $ 19.14 in earnings per share. In particular, Alphabet shares have risen by around a single percentage point after business hours, reflecting a similarly muted market reaction to better than expected earnings results officially from Microsoft.

Alphabet is a company with several moving parts, so let’s take a look at the numbers a bit.

YouTube’s reported revenue of $ 7.0 billion, up 84% year-over-year. This feels like a strong result, frankly, given YouTube’s age. That said, your humble server is wondering how much heavier your YouTube ad load can get before a rival service robs you of some of your oxygen. On a separate note, YouTube revealed that its YouTube Shorts product has “surpassed 15 billion global daily views,” up 131% from the 6.5 billion global daily views it detailed in March. (It seems like everyone wants to eat TikTok.)

Google Cloud reported revenue of $ 4.6 billion, up 54% year-over-year. That growth rate is slightly above what Microsoft posted for its Azure cloud unit. However, given that Microsoft’s effort is seen to be greater than Google’s in terms of revenue, investors could have anticipated higher growth than Mountain View just detailed. Google Cloud cut its $ 1.4 billion operating loss in the second quarter of last year to a much more modest deficit of $ 591 million in its most recent quarter. Honestly, that’s pretty good.

On the Other Bets side, revenue increased! But so did the losses. The skunkworks group in Alphabet posted $ 192 million in revenue, up from $ 148 million in the same period a year earlier. But the trial and error collection lost $ 1.4 billion in the quarter, up from $ 1.1 billion in the corresponding period a year earlier.

Naturally, with operating income of $ 19.4 billion inclusive from its cost center Other bets, Alphabet can afford to continue spending on projects that, over time, may generate material income in the future.

Still, everything in Alphabet other than Google’s top offering (search, YouTube, etc.) lost money in the quarter:

The real story, however, is in the epic gains Alphabet posted in operating income from the second quarter of 2020 to the second quarter of 2021. Just look at that acceleration in operating income! It is a somewhat disconcerting result in terms of quality.

What else to take note of? Google’s share buyback program has been changed in part, but not in a way that should affect regular investors. So we can leave Alphabet’s quarterly content that the company did well enough to defend its market capitalization of just over $ 1.75 trillion, even if it failed to add much to the figure in after-hours trading. Until now.

It’s a great time to be a great tech company.

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