Alphabet revenue grows 23% but cloud business still losing billions, lagging competitors

Shares of Alphabet, the parent company of Google, rose 6% in extended trading on Tuesday after the company reported fourth-quarter earnings that surpassed analysts’ expectations.

Here’s how the company did:

• Earnings: $22.30 per share, adjusted, vs., $15.90 per share as expected by analysts, according to Refinitiv.
• Revenue: $56.90 billion, vs. $53.13 billion as expected by analysts, according to Refinitiv.
• Google Cloud: $3.83 billion, vs. $3.81 billion as expected by analysts, according to StreetAccount.
• YouTube ads: $6.89 billion, vs. $6.11 billion as expected by analysts, according to StreetAccount.
• Traffic acquisition costs (TAC): $10.47 billion, vs. $9.32 billion as expected by analysts, according to StreetAccount.

Alphabet’s revenue grew 23% on an annualized basis in the quarter, according to a statement. That’s stronger growth than last year’s Q4, which came in at 17%, and suggests that Google’s advertising business is recovering well after a big slowdown in Q2 of last year.

The company also broke out operating income from its cloud business for the first time: the company lost $5.61 billion during the full year, and $1.24 billion during Q4, showing that the business is still in investment mode. By way of contrast, Amazon‘s cloud business earned an operating profit of $13.53 billion last year and $3.56 billion last quarter.

Advertising revenue for the fourth quarter came out to $46.20 billion, up from $37.93 billion in the same quarter last year.

The company’s Other Bets segment, which includes life sciences unit Verily and self-driving unit Waymo, brought in $196 million in the fourth quarter and $657 million during the year. The company showed operating loss of $4.48 billion in 2020.

Google’s “Other Revenue” came in at $6.67 billion in Q4. That’s up from $5.26 billion Q4 2019.

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