Google's profitability doubles as ad sales surge coming out of pandemic

Lawmakers debate stricter regulations for social media platforms

Google's digital advertising network has shifted back into high gear. Parent company Alphabet Inc. reported profit that more than doubled after an unprecedented reversal during the early stages of the pandemic.

The robust first-quarter advertising growth announced Tuesday is the latest sign that advertisers are expecting the economy to roar back to life as more people get vaccinated against COVID-19 and burst out of their pandemic cocoons.

The company's ad sales surged 32% from the same time last year to nearly $45 billion during the January to March period. It's the third consecutive quarter of accelerating ad growth for Google following an 8% decline during last year's April to June period. That marked the first time Google's quarterly ad revenue had fallen from the previous year since the search company went public in 2004.

The resurgence enabled Google parent Alphabet to easily surpass the analyst estimates that help set investor expectations.

Alphabet earned $17.9 billion, or $26.29 per share, more than double what it reported the same time last year. The profit was inflated by an accounting change of $650 million, or 97 cents per share.

Total revenue, which also includes Google's cloud-hosting service and device sales, climbed 34% from last year.

Analysts had projected earnings of $15.76 per share on revenue of $51.5 billion, according to FactSet. The performance pleased investors, who drove up Alphabet's stock by 4% in extended trading after the numbers came out.

World shifting online

Aside from the one-quarter downturn in ad revenue, Google has mostly thrived throughout the pandemic as people become more dependent on its services — a phenomenon that has strengthened other technology stalwarts such as Apple, Amazon, Microsoft, Facebook and Netflix.

How Biden is expected to tackle issues with "Big Tech"

Alphabet's stock is trading above $2,300, nearly doubling since the pandemic was declared 13 months ago, leaving the company with a market value of nearly $1.6 trillion.

Google's critics contend much of its success has come through anti-competitive practices tied to the dominance of its search engine, which has become the de facto gateway into the digital world. Those complaints culminated in a series of lawsuits filed by U.S. regulators last year in cases aimed at reining in Google's ability to expand, if not forcing a breakup of its services, which includes the video company YouTube.

But the main lawsuit filed by the U.S. Justice Department isn't scheduled to go to trial until September 2023, leaving Google ample time to extend its marketplace tentacles even further while fighting a case that it contends is unfounded.

Google's YouTube video site remains one of the company's fastest rising stars, with ad revenue increasing 49% from last year to $6 billion. The company's cloud-computing service is also rapidly expanding; its revenue shot up 46% from last year.

f

We and our partners use cookies to understand how you use our site, improve your experience and serve you personalized content and advertising. Read about how we use cookies in our cookie policy and how you can control them by clicking Manage Settings. By continuing to use this site, you accept these cookies.