Shares of
Alphabet, the world's largest provider of search and video ads, rose 3.3% in
extended trading after the results, which handily beat analyst estimates.
Shares of Facebook, which competes with Google in web ad sales and reports its
own results on Wednesday, rose 1.3%.
Overall, it was a stellar day for the big U.S. tech
companies - Apple and Microsoft also reported record earnings.
With consumers spending more time online during the
coronavirus pandemic, retailers have been pushing to reach them there, whether
they're shopping for products using Google search or watching videos on
YouTube. The nascent U.S. economic rebound that's accompanied the vaccine
rollout and the easing of restrictions is also helping as consumers are
enjoying increased mobility and options for purchases of all kinds.
"Alphabet has benefited from the general return of ad
spend to the market and especially the balance of that return, which is more
focused on digital channels than pre-pandemic," said Tom Johnson, chief
digital officer at WPP Mindshare.
Alphabet said revenue from Google advertising rose nearly
70% to $50.44 billion during the second quarter ended June 30.
Retail brands were the biggest contributor to the ads
business' growth, said Philipp Schindler, Google's chief business officer,
during a call with analysts. The travel, financial services and media and
entertainment sectors were also strong, he added.
Ad revenue for the company's streaming video platform
YouTube jumped 83.7% from the year-ago quarter to $7 billion - nearly as much
as Netflix generated in quarterly revenue.
Results "outperformed our expectations across all three
lines of Google's ad business: search, Google Network, and YouTube," said
Nicole Perrin, eMarketer principal analyst at Insider Intelligence.
"YouTube was the fastest-growing segment during the quarter and points to
the continued strength of video advertising for both direct response and brand
goals."
Total revenue for Alphabet rose 61.6% to $61.88 billion,
well above Wall Street estimates of $56.16 billion, according to IBES data from
Refinitiv.
Quarterly profit was $18.5 billion or $27.26 per share,
beating expectations of $19.34 per share.
Google Cloud, which trails Amazon.com Inc and Microsoft Corp
in market share, narrowed its operating loss to $591 million during the
quarter.
The strong results coincide with Alphabet facing four
antitrust lawsuits brought by U.S. federal regulators or states, which threaten
to force major changes across its business including advertising and smart-home
gadgets.
Most recently, 37 U.S. state and district attorneys general
alleged earlier this month that Google "unlawfully" maintained a
monopoly for its app store on Android phones. The lawsuits are expected to take
years to resolve. -Reuters
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