Google delivers a big earnings beat
- Alphabet, Google's parent company, reported its third-quarter earnings on Tuesday.
- The company delivered beats on revenue, EPS, its advertising business, and Google Cloud revenue, which grew 35% year over year.
Google's parent company, Alphabet, released better-than-expected earnings results for the third quarter after the closing bell on Tuesday.
Revenue from Google Cloud grew 35% year over year to $11.4 billion, bolstered by "accelerated growth" in the company's AI products, the company said.
Here are the key numbers for the third quarter compared to analysts' expectations:
- Earnings per share: $2.12 vs. $1.83 expected
- Revenue: $88.27 billion vs. $86.44 billion expected
- Google Advertising: $65.9 billion vs. $65.5 billion
- YouTube advertising revenue: $8.92 billion vs. $8.89 billion expected
- Google Cloud revenue: $11.35 billion vs. $10.79 billion expected
Source for analyst expectations: Bloomberg
Alphabet and Google CEO Sundar Pichai said in the earnings release that "YouTube's total ads and subscription revenues surpassed $50 billion over the past four quarters for the first time."
"Our commitment to innovation, as well as our long-term focus and investment in AI, are paying off with consumers and partners benefiting from our AI tools," he added. "We generated strong revenue growth in the quarter, and our ongoing efforts to improve efficiency helped deliver improved margins."
The search giant's earnings arrived less than three months after a federal judge ruled the company violated antitrust law by illegally maintaining a search monopoly. Its multibillion-dollar-a-year search deal with Apple and other paid partnerships came under the microscope. A potential breakup hangs over the company's head, and a protracted legal fight is expected.
The company in October also announced a major reorganization amid its growing AI efforts, moving the Gemini app team under the Google DeepMind team led by Demis Hassabis.
Ahead of a 4:30 p.m. ET earnings call with analysts, Wall Street analysts are looking for updates on the company's massive AI investments, advertising business, subscriptions like YouTube TV and Premium, and how its popular search product is doing against increasing competition from AI startups like OpenAI and Perplexity.
"Google felt the heat from legal pressure this quarter," said Evelyn Mitchell-Wolf, an analyst at Emarketer, a sister company to Business Insider. "A federal judge ruled Google operates illegal monopolies in search; Google defended itself in court for another antitrust case against its ad tech business; and the clock is ticking on Google's temporary administrative stay for the remedies delivered in yet another antitrust case concerning its Play Store. But none of these will affect Google's earnings yet."
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