Alphabet profits rocket on lockdown boom

Google-owner Alphabet has reported a surge in quarterly profits, after the Covid-19 pandemic powered demand for online services.

Revenues for the three months to 31 March came in at $55.3bn, a 34% hike on the same period a year previously and ahead of analysts’ forecasts, for around $51.6bn.

Net income surged 162% to $17.9bn, while diluted earnings per share were $26.29, compared to $9.87 in 2020.

Within individual divisions, the core Google Services unit - which includes advertising revenue from Google Search and YouTube - saw revenues spike 34% to $51.2bn and operating income improve 69% to $19.5bn. YouTube ad revenues were nearly $2bn higher at $6.obn.

Revenues in the Cloud business improved to $4.0bn from £2.8bn a year earlier, helping to trim losses, from $1.7bn to $974m.

Alphabet also announced a $50bn share buyback programme, which combined with the forecast-beating results, helped send the shares 4.5% higher in after-hours trading.

Sundar Pichai, chief executive, said: “Over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained. We’ve continued our focus on delivering trusted services to help people around the world. Our cloud services are helping businesses, big and small, accelerate their digital transformations.”

However, with lockdown restrictions now easing, in a call with analysts chief financial officer Ruth Porat conceded it was “too early to say how durable” the changes in consumer behaviour seen during the pandemic would be.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: “Covid means phenomenal sums of money have shifted to online shopping, so Alphabet’s impenetrable family of digital advertising businesses have seen revenue skyrocket. An increase reliance on digital, rather than physical, activity, is not something that’s going to dissipate either.

“The one fly in the ointment where Google is concerned is increased regulation. Alphabet has paid eyewatering fines in recent memory, and there’s been a fresh round of scrutiny following the furore over Australian news.”