Strong Ads and YouTube Drive Alphabet in Major Earnings Beat

Alphabet Inc. (NASDAQ: GOOGL) may have been grilled over antitrust issues in recent days, but now regulators and investors alike get to see its earnings for the third quarter of 2020. The online services giant reported earnings of $16.40 per share and $46.17 billion in revenues.

The consensus estimates from Refinitiv were calling for just $11.29 in earnings per share (EPS) on $42.9 billion in revenue. The long and short of the report is that Alphabet’s revenues rose 14% in total and its gross margin was up a 1-point from a year ago.

Alphabet’s operating margin was shown as 24% based on $11.21 billion in operating income during the third quarter. Google’s core advertising revenues came in at $37.1 billion, and its own properties were assigned $31.38 billion for their revenues.

The parent of Google also announced that its traffic acquisition cost was $8.17 billion. Within its own properties, YouTube broke the $5 billion mark with $5.04 billion in revenues.

Alphabet further cited increased advertiser spending in search and in YouTube, as well as seeing continued strength in Google Cloud and Play.

There was another boost in the company’s cash and short-term securities. Alphabet’s level of $119.67 billion was up from $132.59 billion a year ago.

Sundar Pichai, Chief Executive Officer of Alphabet and Google, said:

We had a strong quarter, consistent with the broader online environment. It’s also a testament to the deep investments we’ve made in AI and other technologies, to deliver services that people turn to for help, in moments big and small.

Here is one recent take on how a breaking up of the Google empire might look if regulators do go after it on antitrust issues.

Alphabet closed up 3.05% at $1,556.88 ahead of the report and its stock was last seen trading up over 6% at $1,661.00 on Thursday. Its 52-week range is $1,008.87 to $1,726.10 and Refinitiv had a $1,762.90 consensus analyst target price.

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