Alphabet beats on top and bottom lines, boosted by cloud revenue
Google CEO Sundar Pichai speaks with Emily Chang during the APEC CEO Summit at Moscone Center West in San Francisco on Nov. 16, 2023.
Justin Sullivan | Getty Images News | Getty Images
Google parent Alphabet reported third-quarter earnings that beat on top and bottom lines with strong revenue growth from the company’s cloud unit.
The company’s shares rose 4% in after-hours trading.
Here are the results:
Earnings per share: $2.12 vs $1.85 expected by LSEGRevenue: $88.27 billion vs $86.30 billion expected by LSEG
Here are other numbers Wall Street was watching:
YouTube advertising revenue: $8.92 billion vs. $8.89 billion, according to StreetAccountGoogle Cloud revenue: $11.35 billion vs. $10.88 billion, according to StreetAccountTraffic acquisition costs (TAC): $13.72 billion vs. $13.53 billion, according to StreetAccount
Alphabet’s revenue grew 15% year over year, which is stronger than the same quarter last year.
The company reported blow-out cloud revenue at $11.35 billion — up nearly 35% from the $8.41 billion a year ago. The company attributed its strong cloud results to their AI offerings, which includes subscriptions for enterprise customers.
Alphabet CEO Sundar Pichai opened his call with investors saying the company’s “full-stack” of AI products are now operating at scale and being used by Google’s billions of users, “creating a virtuous cycle.”
The search company’s strong quarter kicks off a big week of earnings for tech’s mega-cap companies. Meta and Microsoft report on Wednesday followed by Apple and Amazon on Thursday.
The company reported advertising revenue of $65.85 billion — up from $59.65 billion a year ago, showing that Google’s advertising business continues to grow, though at a slower pace than in the second quarter.
YouTube ad revenue just beat analysts’ expectations, showing better growth than last quarter. The Google-owned company faces increased pressure from other advertiser options such as Netflix, TikTok and Amazon.
Net income increased to $26.3 billion, or $2.12 per share, compared to $19.7 billion, or $1.55 per share, in the year-ago quarter.
Other Bets, which includes the company’s life sciences unit Verily and self-driving car unit Waymo, reported revenue of $388 million in the third quarter. That’s up from $297 million a year ago.
Last week, Waymo closed a $5.6 billion funding round to expand its robotaxi service in Los Angeles, San Francisco and Phoenix and to more cities.
Alphabet’s third quarter was filled with shake-ups externally and internally, including at its most senior ranks and its most important business.
Earlier this month, the company replaced Prabhakar Raghavan, the company’s search and ads boss since 2018, with Nick Fox, a longtime executive known for his role in Google’s Assistant unit. Additionally, the team working on the Gemini app, which includes the company’s artificial intelligence direct-to-consumer products, will join Google DeepMind under head Demis Hassabis.
The company on Tuesday announced that it is evaluating how this reorganization will affect its segment operating results.
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