Google’s fourth-quarter ad sales soar again, parents plan to split shares

Google’s digital advertising empire turned in another strong performance during the holiday shopping season, propelling a 36% increase in revenue for its parent company in the last three months of 2021

SAN RAMON, Calif. — Google’s digital advertising empire turned in another strong showing during the holiday shopping season, propelling a 36% increase in revenue for its parent company in the last three months of 2021.

The results announced Tuesday underscore how the tech giants have adapted to become even more successful during a nearly two-year pandemic that has upended much of the economy.

In a show of confidence meant to make its shares more affordable, Google’s parent company Alphabet also announced plans for its first stock split since 2014. If approved, the proposed 20-for-one split will reduce the price of each share in July while keeping Alphabet’s market value intact. Alphabet shares jumped 7% in extended trading after the news broke.

Google stumbled at the start of the pandemic in 2020, which saw it suffer its first year-over-year decline in quarterly revenue.

But as government-mandated shutdowns have caused people to order more takeout and shop more online, Google’s dominant online advertising network has become even more of a magnet for merchants trying to connect with consumers locked at home.

During the October-December period last year, Google earned $61.2 billion in ad sales, a 33% increase over the same period a year earlier.

As usual, Google’s advertising business accounted for the bulk of Alphabet’s earnings. The Mountain View, Calif., company earned $20.6 billion, or $30.69 per share, well above the estimated average of $27.66 per share among analysts polled by FactSet Research. Revenue rose 32% from a year earlier to $75.3 billion, eclipsing analyst forecasts for revenue of $72.3 billion.

The impressive numbers pushed Alphabet’s stock price near $3,000 in extended trading. If the stock hovers around that price at the time of the proposed stock split, the shares would reprice to around $150 each.

In 2021, Google’s ad revenue topped $200 billion for the first time in the company’s 23-year history. Ad sales of $209.5 billion last year represented a 55% increase from the $134.8 billion posted in 2019 – the last full year before the pandemic changed everything.

Unlike recent quarters, advertising growth on Google’s YouTube video service lagged slightly behind the company’s overall gains. In the last quarter, YouTube’s advertising revenue totaled $8.6 billion, a 25% increase over the previous year. For all of 2021, YouTube generated $28.8 billion in advertising, nearly double its 2019 harvest.

Google’s prosperity has made it a target for both regulators and lawmakers, who believe the company has abused the power of its popular search engine and other services such as Maps, Gmail and the Chrome browser to unfairly trample the competition. Some of these claims are aired in a series of antitrust lawsuits filed in 2020 by the US Department of Justice and state attorneys general.

Several states are also suing Google over allegations that it secretly tracked its users to help sell ads even though they changed privacy settings to prevent location tracking, a situation first reported by the Associated Press in 2018.

Google has denied any wrongdoing and is fighting legal action that could undermine its future ad sales.

Comments are closed.