Alphabet revenue up 14% after second-quarter slump
Google parent company Alphabet beat Wall Street expectations in the third quarter of 2020, announcing total revenues of $46.2 billion with its shares rising more than 9% in after-hours trading.
Why it matters: The company rebounded with its revenue up 14% after a tough second quarter, when its saw its first-ever revenue decline attributable to a lowered advertising growth rate amid the COVID-19 pandemic.
- The report comes after state and federal regulators sued the company for antitrust violations and CEO Sundar Pichai testified before Congress Wednesday about charges the company censors conservatives.
- Addressing the antitrust suit, Pichai said during the third-quarter investor call: "We believe that our products are creating significant consumer benefits, and we’ll confidently make our case."
- Pichai touted the importance of Google Search, saying he was confident people used it because they wanted to, not because they have no choice, and Google's success in search is not "guaranteed."
What they're saying:
- "We had a strong quarter, consistent with the broader online environment,” CEO Sundar Pichai said in Alphabet's earnings release. “It’s also a testament to the deep investments we’ve made in AI and other technologies, to deliver services that people turn to for help, in moments big and small.”
- “Total revenues of $46.2 billion in the third quarter reflect broad based growth led by an increase in advertiser spend in Search and YouTube as well as continued strength in Google Cloud and Play,” Ruth Porat, chief financial officer of Alphabet and Google, said.
- Pichai said Alphabet would start pulling out Google Cloud financials as a separate segment in future quarters.
By the numbers, via CNBC:
- Earnings: $16.40 versus $11.29 per share, based on Refinitiv consensus estimates
- Revenue: $46.17 billion, versus $42.90 billion expected by Refinitiv
- YouTube advertising revenue: $5.04 billion versus $4.39 billion expected, according to StreetAccount estimates
- Google Cloud revenue: $3.44 versus $3.32 billion expected, as per StreetAccount
- Traffic acquisition costs: $8.17 billion versus $7.66 billion expected, as per StreetAccount
Editor's note: This story has been updated with comments from Alphabet's earnings call.