Alphabet achieves 30% operating profit margin for the first time since its launch... $50B share buyback (Comprehensive)

Q1 Revenue Increased 34% to $55.3 Billion, Exceeding Expected $51.7 Billion... Operating Profit Doubled

[Photo by AP Yonhap News]

[Asia Economy Reporter Byunghee Park] Alphabet, the parent company of Google, achieved a quarterly operating profit margin of 30% for the first time since its launch in 2015. With expectations of economic recovery boosting advertising revenue, Alphabet announced better-than-expected first-quarter results for this year on the 27th (local time) and revealed a $50 billion share repurchase plan.

Alphabet reported that its first-quarter revenue this year reached $55.3 billion, a 34% increase compared to the same period last year. This exceeded Wall Street analysts' expectations of $51.7 billion and approached the record high revenue of $56.9 billion achieved in the fourth quarter of last year. Google stated that excluding the portion returned to partners, first-quarter revenue was $45.6 billion.

Bloomberg explained that increased advertising from travel and retail sector companies likely boosted Google's revenue, and that Google's strong performance signals an economic recovery.

Alphabet's Chief Financial Officer (CFO) Ruth Porat also explained, "The first-quarter results show increased consumer online activity and an expanded base of advertising revenue." However, Porat noted that the sustainability of this growth is uncertain and depends on the COVID-19 recovery situation.

Specifically, search-related revenue increased by 30.1% to $31.9 billion, YouTube advertising revenue rose 48.7% to $6.0 billion, Google Network revenue grew 30.2% to $6.8 billion, cloud revenue increased 45.7% to $4.0 billion, and other segment revenue rose 46.4% to $6.5 billion. Revenue from startup investments and other sources also increased 46.7% year-over-year to $198 million. Search-related revenue accounted for 81% of total revenue.

Operating profit for the first quarter was $16.437 billion, doubling from $7.977 billion in the first quarter of last year. The operating profit margin, which was 19% in the first quarter of last year, surged vertically to 30%.

Net profit for the first quarter surged 162% to $17.9 billion. Earnings per share were $26.29, significantly surpassing Wall Street's estimate of $15.88.

The cloud segment, which has been trailing Amazon and Microsoft, reduced its operating loss. The cloud segment's operating loss was $974 million, down 44% year-over-year.

Alphabet announced a $25 million share repurchase plan in 2019 and has now announced a new $50 billion repurchase plan. Brent Thill, an analyst at investment bank Jefferies, estimated that Alphabet has the capacity to spend about $56 billion on share repurchases.

Google's stock price fell 0.84% during regular trading but surged in after-hours trading following the earnings announcement. As of 7:01 PM local time, the stock was up 4.53% compared to the regular session closing price.

This content was produced with the assistance of AI translation services.