Google’s Growth Continues Despite Regulatory Concerns

Earlier last week, Google (Nasdaq: GOOG) reported its first-quarter results that continued to surpass market expectations. Google’s ad revenues for the quarter shattered all previous sales records for the first quarter as digital ad spending continued to increase. Regulators are trying to limit the power big tech has on global economies and population. But that appears to be doing little to stop Google’s growth.

Alphabet’s Financials

Alphabet’s first-quarter net revenues grew 34% over the year to $55.31 billion, ahead of the market’s forecast of $51.7 billion. Net income rose 45% to $26.29 per share, surpassing the market’s forecast of $15.66 for the quarter.

By segment, revenues from Google Services that includes Search, advertising, Android, Chrome, hardware, Google Maps, Google Play, and YouTube grew from $38.2 billion a year ago to $51.2 billion. Google Cloud revenues grew 46% to $4.05 billion, in line with analyst predictions. Revenues from other bets fell to $198 million.

Google Services' operating income grew from $11.5 billion last year to $19.5 billion. Google Cloud and its Other Bets are loss-making divisions. Cloud ended the quarter with a loss of $974 million and Other Bets reported a loss of $1.15 billion.          

Among other key metrics, overall search revenues grew from $24.5 billion to $31.9 billion. YouTube revenues grew from $4.04 billion to $6.005 billion.

Google did not provide an outlook for the current quarter. The market is looking for an EPS of $15.63 on revenues of $44.1 billion for the coming quarter and EPS of $69.57 on revenues of $187.94 billion for the current fiscal year.

Alphabet’s Product Enhancements

During the quarter, Google continued to improve its product offerings across its key businesses. Within YouTube, it added a new metric to its transparency reports called the Violative View Rate, which will help it estimate the percentage of views on YouTube that come from content that violates its policies. By investing in machine learning, it is working to reduce this rate. In Q4 2020, its Violative View Rate was between 16 and 18 views out of every 10,000 which has reduced by 70% from a few years ago.

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Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own ...

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