Google parent Alphabet Inc on Tuesday reported record revenue for the second straight quarter despite the pandemic, driving shares up 6% as it topped estimates for both advertising and Cloud sales as customers unleashed budgets for the holidays.
Cutbacks by travel and entertainment advertisers in 2020 were nearly made up as the year went on by new spending from retail clients and others that were driven online by COVID-19 lockdowns.
Google’s advertising business, including YouTube, accounted for 81% of Alphabet’s $56.9 billion in fourth-quarter sales, which rose 23% compared with a year ago.
Google’s Cloud unit also benefited from the pandemic. Google Cloud sales were $3.83 billion, or $13.1 billion for the full year, up 46% from 2019.
Analysts tracked by Refinitiv had estimated quarterly revenue of $53.1 billion and Cloud sales of $3.82 billion.
In a new disclosure, Alphabet said Google Cloud posted an operating loss of $1.24 billion in the fourth quarter and $5.6 billion for 2020, a 21% wider loss than in 2019.
Google, which generates more revenue from internet advertising than any company globally, has long faced questions over whether it can spin the cash from its advertising business into a newly profitable venture. The new financial details suggest that goal still may be years away.
Alphabet’s quarterly profit rose 43% to $15.2 billion, or $22.30 per share, compared with the average estimate of $10.895 billion, or $15.95 per share.
The company said it expects a $2.1 billion boost to operating results in 2021 after a new assessment extended the useful life of its servers and networking gear by a year or more.
Alphabet shares rose 6% to $2,035.95 in after-hours trading on Tuesday. The stock has risen by 9.5% so far this year.