Alphabet's Q1 revenue surges 34% to $55.3 billion

The company's net income almost trebled to $17.9 billion from $6.8 billion

e4m by exchange4media Staff
Updated: Apr 28, 2021 2:43 PM

Alphabet, the parent company of Google, has posted a 34% increase in revenues at $55.3 billion for the first quarter ended March 31, 2021, as against $41.1 billion in the corresponding quarter of the previous fiscal.

The company's net income almost trebled to $17.9 billion from $6.8 billion. Operating income surged by 30% to $16.4 billion from $7.9 billion.

Total Google Services revenues were $51.2 billion, up 34%, consisting of Google Search and other advertising revenues of $31.9 billion in the quarter, up 30%, with strength across most categories led by retail. YouTube advertising revenues of $6 billion, up 49%, driven by exceptional performance in direct response and ongoing strength in brand advertising. Network advertising revenues of $6.8 billion, up 30%, driven by AdMob and Ad Manager.

Other revenues were $6.5 billion, up 46%, primarily driven by growth in Play and YouTube non-advertising revenues, followed by hardware, which benefited from the addition of Fitbit revenues. Google Services operating income was $19.5 billion, up 69%, and the operating margin was 38%.

Turning to the Google Cloud segment, including GCP and Google Workspace, revenues were $4 billion for the first quarter, up 46%. GCP's revenue growth was again meaningfully above Cloud overall. Strong growth in Google Workspace revenues was driven by growth in both seats and average revenue per seat. Google Cloud had an operating loss of $1 billion.

The company's total cost of revenues was $24.1 billion, up 27%, primarily driven by other costs of revenues, which was $14.4 billion, up 25%, followed by TAC, which was $9.7 billion, up 30%.

Alphabet and Google CEO Sundar Pichai said, “Over the last year, people have turned to Google Search and many online services to stay informed, connected, and entertained. We’ve continued our focus on delivering trusted services to help people around the world. Our Cloud services are helping businesses, big and small, accelerate their digital transformations."

Alphabet and Google CFO Ruth Porat said, “Total revenues of $55.3 billion in the first quarter reflect elevated consumer activity online and broad-based growth in advertiser revenue. We’re very pleased with the ongoing momentum in Google Cloud, with revenues of $4.0 billion in the quarter reflecting strength and opportunity in both GCP and Workspace.”

Google said that, in January 2021, it completed an assessment of the useful lives of its servers and network equipment and adjusted the estimated useful life of our servers from three years to four years and the estimated useful life of certain network equipment from three years to five years.

This change in accounting estimate was effective beginning in the fiscal year 2021 and the effect for the three months ended March 31, 2021, was a reduction in depreciation expense of $835 million and an increase in net income of $650 million, or $0.97 per basic and $0.95 per diluted share.

The company ended the first quarter with $135 billion in cash and marketable securities.

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