Google parent Alphabet has surprised on the upside after sales surged to $56.9bn for the last three months of 2020 – up from $46bn the year before – on the back of a rampant YouTube and recovery in search advertising.
Google’s advertising rebound
Alphabet has rebounded strongly from the immediate impact of Covid-19, as reflected in stonking fourth-quarter earnings that blew away even the most optimistic observers.
Key to the internet giant’s success has been the runaway hit of YouTube among a locked-down populace, where revenues totaled $6.9bn for the year (up from $4.7bn the year previous) with revenues in the last quarter alone totaling $5bn.
Another bright spot was search and advertising revenue, which stood at a healthy $31.bn for the year – a significant strengthening of Google’s financial position from the $27.2bn recorded just a year before.
These twin engines of growth helped power group revenues northward towards $56.bn in the fourth quarter, a 23% premium on the year prior when the corresponding figure stood at $46.1bn.
Pichai also praised YouTube’s e-commerce and educational functionality as key to a rapid rebound from the initial shock of the pandemic, which hit Google hard before it recovered ground in the third and fourth quarters.
With viewing time on the increase, brand advertising and connected TV remaining the chief growth drivers at YouTube, complementing Google’s more mature search and display ad business.
Behind the attention-grabbing heavy hitters, Google Cloud revenues weighed in at $13bn for 2020 and $3.8bn for the quarter, broadly in line with expectations.
This masked a small but significant rise in operating losses from $1.19bn to $1.24bn but is set to become another Google golden goose as investors turn their capital to back winners in the so-called ’cloud wars’ between Alphabet, Amazon and Microsoft.
Google’s results coincide with its first detailed roadmap for the rollout of Federated Learning of Cohorts (FLoC), a privacy focussed replacement for third-party cookies necessary for the targeted delivery and measurement of ads.
Google’s mounting financial and digital clout is raising concern among regulators, sparking a stand-off with Australia over a proposed mandatory code of conduct that would oblige it to pay publishers for content it shares.