Business Maverick: Google Shakes Off Omicron With Shopping Ads and Cloud Revenue

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Google parent Alphabet Inc. posted fourth-quarter sales and profit that topped analysts’ projections, showing the resilience of its advertising business in the face of major economic upheaval as the pandemic persists. The shares soared in late trading.

Sales, excluding partner payouts, rose 33% to $61.9 billion, compared with the $59.4 billion average analyst estimate. Google’s advertising revenue also grew by 33% during the holiday quarter, despite the disruptions to its biggest categories, travel and retail, from the spread of the omicron Covid-19 variant and supply chain crunches. The company also declared a 20-for-1 stock split.

Shares surged 8.7% in extended trading, after closing at $2,752.88. The stock has declined about 5% so far this year. Retail ads were the biggest contributor to Google’s growth, chief business officer Philipp Schindler told investors on the call. During the fourth quarter, YouTube launched a new shopping initiative with some of its young star creators.Net income climbed to $20.6 billion, or $30.69 a share, compared to the $27.35 per-share estimate, Alphabet said Tuesday in a statement.

In their third-quarter report, Google executives said YouTube had seen a “modest impact” on revenue from Apple’s move to limit ad targeting on iPhones. Compared with rivals like Meta Platforms Inc.’s Facebook and Snapchat parent Snap Inc., Google is less reliant on third-party trackers Apple has banned. In a research note before earnings, analyst Mark Mahaney of Evercore ISI wrote that “Google has likely been a beneficiary” of Apple’s restrictions.

Traffic acquisition costs — the funds Google pays out to publishers and device makers like Apple Inc., a figure investors monitor closely — rose 28% in the quarter.

 

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