Google parent Alphabet returns to growth as advertisers flock back
Google parent company Alphabet reported a return to growth in the third quarter as advertisers flocked back in their droves after a coronavirus-induced slump.
The tech giant, which also owns Amazon, reported revenue of $46.2bn (£35.7bn) in the three months to the end of September, up 14 per cent on the same period last year.
Operating profit for the period hit $11.2bn, up from $9.2bn in 2019.
The growth came in ahead of analysts’ expectations, pushing Alphabet’s shares up almost nine per cent in after-hours trading.
Alphabet had posted a two per cent decline in revenue in the second quarter as the outbreak of coronavirus took its toll on ad spend.
But advertising rebounded strongly in the third quarter as some business confidence was restored.
The growth was driven by Google advertising, which accounted for 80 per cent of the company’s total revenue in the third quarter.
Youtube ad revenue also increased from $3.8bn to $5bn over the period as vloggers and fitness favourites such as Joe Wicks continued to attract viewers.
Google Cloud — an increasingly important part of Alphabet’s business — also posted growth in the third quarter.
“We had a strong quarter, consistent with the broader online environment,” said Sundar Pichai, chief executive of Alphabet and Google.
“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.”
The figures highlight the significance of Google’s lucrative search advertising business, which has grown strongly over the period.
But the company’s dominance in this market has also attracted scrutiny from regulators, with the US Department of Justice filing a lawsuit against Google for alleged unfair practices in shutting out its rivals.
Haris Anwar, analyst at Investing.com, said Google had “crushed expectations”.
“The biggest surprise comes from Youtube, where ad sales have been much stronger than expected,” he said. “These earnings suggest that the worst might be over for the social media giant.”