jumped into trading late Tuesday after the company broke investor expectations and reported record quarterly revenue.
The Google parent reported second quarter net income of $18.5 billion, representing $27.26 per share, compared to net income of $7 billion, or $10.13 per share in the same period a year ago. Sales rose 62% to $61.9 billion.
Wall Street’s consensus estimate was for earnings of $19.35 per share and revenue of $56.2 billion.
CFO Ruth Porat attributed the company’s success to “increased consumer online activity” and “broad strength in advertiser spend.” The company reported search and other revenue of $35.9 billion, and YouTube ad revenue of $7 billion, both exceeding investor expectations.
Traffic acquisition costs, or TAC, are the fees Google pays people like betaalt
(AAPL) for search deals, was $10.9 billion in the second quarter.
It was widely expected that Alphabet would have a strong quarter, in part because the first half of 2020 was bleak for the digital advertising market. Amid fears of the Covid-19 pandemic, many companies cut ad spend, slowing or reversing the growth of several tech companies, including Alphabet.
But last year’s weak quarter meant investor expectations were high on Tuesday afternoon’s technical gains. The digital advertising giants were expected to exceed estimates and issue bullish guidance.
Alphabet has not issued a forecast when the results are published.
Excluding Alphabet’s advertising business, Google’s Cloud computing segment reported a 53% increase in second-quarter revenue to $4.6 billion. The cloud segment’s operating loss was reduced to $591 million, from $1.4 billion a year ago. That loss was significantly less than analysts had expected.
“Our long-term investments in AI and Google Cloud help us significantly improve everyone’s digital experience,” said CEO Sundar Pichai.
Alphabet gave investors another reason to cheer, saying the board had given the company the option to buy back Class A shares in addition to the Class C shares that were part of the existing buyback program. In April, the company approved an additional $50 billion repurchase of Class C shares.
Shares of Alphabet were up 3.1% in after-hours trading. The stock closed 1.6% lower to $2,638 in regular trading Tuesday.
Alphabet is up 51% this year, while the
index rises by 18%.