Alphabet shares pop 8% on big earnings beat, 20-for-1 stock split

Revenue after removing traffic-acquisition costs ($13.4 billion) was $61.9 billion, compared with $46.43 billion in the year-ago period. Overall revenue spiked 32% to $75.3 billion. Analysts surveyed by FactSet had estimated net income of $27.68 a share, on ex-TAC revenue of $59.25 billion.

Equally important, Alphabet’s operating margin improved to 29% in the quarter, vs. 28% in the same quarter a year ago.

“[The fourth quarter] saw ongoing strong growth in our advertising business, which helped millions of businesses thrive and find new customers, a quarterly sales record for our Pixel phones despite supply constraints, and our Cloud business
continuing to grow strongly,” Alphabet Chief Executive Sundar Pichai said in a statement announcing the results.

In a conference call following the earnings report, Alphabet Chief Financial Officer Ruth Porat said the quarter was driven by strong advertising spending, consumer online activity, and “substantial” Google Cloud revenue growth.

Google’s total advertising rose to $61.2 billion from $46.2 billion a year ago. Search comprised $43.3 billion, vs. $31.9 billion a year ago.

YouTube ad sales continued to outperform, jumping to $8.6 billion from $6.9 billion a year ago. YouTube recently hit 5 trillion all-time views, Pichai added in the conference call.

Google’s Cloud revenue soared 45% to $5.5 billion, though the division continues to trail rivals Amazon.com Inc.  AMZN, +1.08%  and Microsoft Corp. MSFT, -0.71% in cloud revenue. Among Google’s customers fueling the growth were Albertsons Cos. Inc. ACI, +0.04%, Box Inc. BOX, -0.04% and Spotify Technology SPOT, +3.75%.

Google’s stock is down 5% so far this year. The broader S&P 500 index  SPX, +0.69% has declined 4.6% in 2022.

“Google’s strong results offer further evidence that they are almost completely immune to supply chain issues as well as recent privacy changes to Apple’s iOS,” Jesse Cohen, senior analyst at Investing.com, said in an email message. “In our view, Google remains one of the best-positioned companies in the tech space as the current operating environment has created a perfect backdrop for the digital advertising giant to continue to thrive.”

Alphabet did not provide first-quarter guidance in its earnings report.

Near the end of the one-hour conference call with analysts late Tuesday, Pichai said Alphabet remained “open to sensible, updated regulations” where technology is beneficial to society, such as protecting children. But he said little of the tech legislation in Congress addresses that. He also suggested small businesses could be unintentionally harmed by a handful of bills in the U.S. House and Senate designed to rein in Big Tech.

He did not specify bills by name, but one could be Open App Markets Act due to be marked up in the Senate this week. The bipartisan bill, co-sponsored by Sens. Richard Blumenthal, D-Conn., Marsha Blackburn, R-Tenn., and Amy Klobuchar, D-Minn., would block app stores at Google and Apple Inc. AAPL, -0.10% from favoring their in-house apps in searches, requiring developers to use their payment systems, and preventing users from downloading apps from third-party stores.