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Illustration: Lazaro Gamio/Axios

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.

Go deeper

Jan 27, 2021 - Technology

Facebook stock whipsaws amid ad targeting concerns

Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images

Facebook's stock showed volatility in after-hours trading Wednesday, despite adding users and beating on top and bottom lines.

Why it matters: Investors seem spooked by proposed changes to user data collection by Apple that would impact Facebook's ad business, in addition to perennial threats of new federal privacy regulations.

Dion Rabouin, author of Markets
Jan 28, 2021 - Economy & Business

Apple raked in $111 billion in revenue in a single quarter

Expand chart
Data: FactSet; Chart: Axios Visuals

Big Tech had a strong start to earnings season, as the S&P 500's heavy hitters reported Wednesday after market close.

What happened: Spurred by strong sales of the latest iPhones, Apple had its strongest quarter ever, raking in $111.4 billion in revenue for the three months ended Dec. 31, far outpacing expectations.

Updated Jan 28, 2021 - Economy & Business

2020 was the economy's worst year since 1946

Source: FRED; Billions of chained 2012 dollars; Chart: Axios Visuals

One of the last major economic report cards of the Trump era lends perspective to the historic damage caused by the pandemic, which continued to weigh on growth in the final quarter of 2020.

By the numbers: The U.S. economy grew at a 4% annualized pace in the fourth quarter, a sharp slowdown in growth compared to the prior quarter. For the full year, the economy shrank by 3.5% — the first annual contraction since the financial crisis and the worst decline since 1946.