Alphabet’s CFO credits ‘resilience in search and momentum in cloud’ as Google parent company tops expectations for profit, revenue and ad sales
Alphabet Inc.’s stock rose 1.4% in extended trading Tuesday after Google’s parent company reported quarterly results that slightly topped analysts’ revenue and earnings estimates.
Alphabet also said its board of directors authorized $70 billion in share repurchases.
“Resilience in Search and momentum in Cloud resulted in Q1 consolidated revenues of $69.8 billion, up 3% year over year, or up 6% in constant currency,” Alphabet (GOOGL)(GOOGL) Chief Financial Officer Ruth Porat said in a statement.
Alphabet Chief Executive Sundar Pichai pointed out the importance of AI in the company’s immediate future. “We introduced important product updates anchored in deep computer science and AI,” he said in a statement. “Our North Star is providing the most helpful answers for our users, and we see huge opportunities ahead, continuing our long track record of innovation.”
Alphabet reported fiscal first-quarter net earnings of $15.05 billion, or $1.17 a share, compared with net earnings of $16.44 billion, or $1.23 a share, in the year-ago quarter.
Revenue was $69.8 billion, compared with $68 billion a year ago. Sales minus TAC was $58.1 billion, compared with $56 billion a year ago.
Analysts surveyed by FactSet had expected on average net earnings of $1.08 a share on revenue of $68.9 billion and ex-TAC revenue of $57.05 billion.
Shares of Alphabet have improved 18% so far this year, while the broader S&P 500 index has increased 6%.
Google’s total advertising sales slid to $54.6 billion from $54.7 billion a year ago, but edged analysts’ average expectations of $53.7 billion. Google Cloud brought in $7.45 billion, compared with $5.8 billion last year. YouTube ad sales slipped to $6.69 billion from $6.87 billion a year ago.
During a conference call with analysts later today, Alphabet executives are expected to be peppered with questions about AI monetization. While Microsoft Corp. (MSFT) is selling its AI version of Bing, Google’s competing entry, Bard, is still being tested by users. Alphabet is furiously pushing an AI search amid a report Samsung Electronics Co. is considering ditching a multibillion-dollar deal with Google search for Microsoft.
Alphabet is ramping up AI initiatives to improve operational efficiency and productivity for 2023 and beyond, said Porat, who noted AI tools are already in use in the finance organization and analytics.
Alphabet’s results come amid a dry patch in digital advertising that has forced Google to ax at least 12,000 jobs as pressure mounts from investors to cut more deeply, and a halt to construction of the company’s massive, 80-acre mega-complex in San Jose, Calif.
Last week, Alphabet disclosed that Pichai received $218 million in stock awards after his previous award cashed in 2022, according to a proxy filing with the Securities and Exchange Commission.