GOOGL Alphabet Inc

By Georgia Wells 

Google rode a surge in online holiday spending to record revenue in the fourth quarter, even though it disclosed for the first time continued losses in its closely watched cloud division.

The internet titan's earnings, released Tuesday afternoon, reflected a continuing recovery in global ad spending that took a hit in early 2020 when people paused travel plans and other purchases in response to the coronavirus pandemic.

Google parent Alphabet Inc. posted a record $56.9 billion revenue, up from $43.2 billion a year ago. The company's advertising units pulled in $46.2 billion, up nearly 22% from a year earlier. Analysts had forecast $52.7 billion in revenue, including $42.3 billion from advertising, according to FactSet.

Alphabet's profit also rose, to $15.7 billion, from $9.3 billion a year ago. Analysts had expected $11.9 billion.

Ruth Porat, Google's financial chief, said the company's search and YouTube units drove its performance in the quarter. "It was a great end to a challenging year," she said.

YouTube revenue soared 46% in the quarter, as advertisers flocked to the video-sharing platform amid the pandemic. The company said the platform now reaches more users between the ages of 25 and 49 than all cable networks combined.

Google also revealed details about the costs of its cloud division for the first time. While that unit brought in $3.8 billion in revenue, overall it lost $1.2 billion in the fourth quarter. This announcement will enable investors to better compare the results of Google's cloud business with those of Amazon.com Inc. and Microsoft Corp.

Meanwhile on Tuesday, Amazon named its cloud computing guru, Andy Jassy, chief executive officer of its entire business, with founder Jeff Bezos shifting to the role of executive chairman.

Analysts had expected Google's cloud business to bring in $3.83 billion in revenue, according to FactSet, compared with $2.61 billion a year ago. Alphabet CEO Sundar Pichai said that in 2020 Google Cloud signed more than three times the number of deals worth at least $250 million as in 2019.

Google has managed to sign up big-name clients for its cloud business.

On Monday, Ford Motor Co. said it had decided to use Google for cloud services to help develop in-car features and manage the reams of data streaming from its vehicles.

Alphabet shares jumped more than 7% in after-hours trading. The stock has gained about 17% over the last three months, compared with a roughly 22% gain in the Nasdaq Composite Index.

The strong holiday season also added to Alphabet's mountain of cash, which now stands at $26.5 billion. Alphabet recorded a cash position of $20.1 billion at the start of October.

Still, Google is facing growing challenges. A set of antitrust lawsuits allege various abuses of its power over online commerce and digital information. They say Google muscles out competitors and sells out the users it claims to protect.

Consumers are also calling for more accountability about how companies use their data. The company has said it plans to restrict the use of third-party cookies in its Chrome internet browser. On a call with analysts, Google's chief business officer Philipp Schindler said the company would continue to adjust its policies. "People are demanding greater privacy," Mr. Schindler said.

A small number of employees of Google have also formed a union. They have said their efforts reflect a need for employees to be able to speak out about the company without facing career repercussions.

On Monday, the Labor Department said Google had agreed to pay more than $3.8 million to resolve a case of hiring and pay discrimination at several locations in California and Washington state.

Google said it now has more than 135,000 employees.

Write to Georgia Wells at Georgia.Wells@wsj.com

(END) Dow Jones Newswires

February 02, 2021 18:36 ET (23:36 GMT)

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