Google (Alphabet) Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
Diluted EPS (GAAP) Beat $26.29 $15.45
Revenue Beat $55.3B $51.6B
Google Cloud Revenue  Match $4.0B $4.0B

Source: Predictions based on analysts' consensus from Visible Alpha

Key Takeaways

  • Google Cloud revenue matched analyst estimates.
  • Google Cloud is one of the company's primary business segments. Cloud revenue is outpacing revenue growth for the company as a whole.
  • Google advertising revenue rose 32.3%, comprising 80.8% of companywide revenue.

Google (Alphabet) Financial Results: Analysis

Alphabet Inc. (GOOGL), parent company of Google, reported Q1 FY 2021 earnings that beat analyst expectations. Diluted earnings per share (EPS) reported in accordance with GAAP came in well above what analysts were forecasting. Revenue also surpassed analyst estimates. Google's cloud revenue came in at $4.0 billion, matching expectations. The company's shares were up more than 4% in after-hours trading. Over the past year, Alphabet's shares have provided a total return of 80.2%, above the S&P 500's total return of 45.5%.

GOOGL Google Cloud Revenue

Google Cloud is one of the tech giant's primary business segments, the other being Google Services. The cloud segment provides developers with a highly scalable and reliable platform for building, testing, and deploying applications. It also offers workspace collaboration tools, including apps like Gmail, Docs, Drive, Calendar, Meet, and more. At the end of 2020, Google Cloud had an estimated 9% of the global cloud market, ranking it third behind Microsoft Corporation's (MSFT) Azure and top-ranked Amazon.com, Inc.'s (AMZN) Amazon Web Services. Google Cloud revenue rose 45.7% compared to the year-ago quarter, while company-wide revenue rose 34.4%.

GOOGL Share Repurchases

The company noted that its board of directors authorized on April 23 an additional $50.0 billion in share repurchases. The repurchases are expected to be carried out from time to time depending on general business and market conditions as well as other investment opportunities. Share buybacks reduce the total number of a company's being held by investors, helping to boost the price of the remaining shares outstanding.

GOOGL Advertising Revenue

Google dominates the digital-advertising market. The company captured as much as 28.9% of U.S. digital ad sales in 2020. In Q1 FY 2021, Google advertising revenue rose 32.3%. At $44.7 billion, Google advertising accounted for about 80.8% of total revenue in the first quarter.

The ongoing transition to online commerce, a trend accelerated by the COVID-19 pandemic, will likely boost the digital advertising market. This should help to fuel Google's revenue growth further. But it faces significant competition from rivals like Facebook, Inc. (FB) and Amazon. However, dominance in online services supports Google's hold on the digital advertising market. Google's search engine garners 92% of online search traffic, and YouTube comprises 73% of online videos.

The company did not offer any forward guidance in its earnings press release. Alphabet's next earnings report (for Q2 FY 2021) is estimated to be released on July 28, 2021.