Google parent Alphabet Inc said on Tuesday (April 25) it would buy back US$70 billion (RM311.4 billion) in stock and posted first-quarter profit and revenue above estimates as demand rose for cloud services and ad sales held up better than expected.
Investors cheered the buyback plan, sending shares of the Google parent as much as 4% higher in after-hours trade before they pared gains to trade up 1.6%. Demand rose for cloud services and Google’s ad sales held up better than expected.
Alphabet reported a slight dip in first-quarter ad sales from a year earlier to US$54.55 billion, which nonetheless beat analyst estimates of US$53.71 billion. It was the third such decline for the company since it went public in 2004, but was the second in a row following a fourth-quarter ad sales drop of 3.6%.
Excluding items, Alphabet reported earnings per share of US$1.17, beating an average estimate of US$1.07 per share.
“Google exceeded both revenue and earnings per share expectations this quarter, but reasons for investor optimism are modest,” said Insider Intelligence senior analyst Max Willens.
He said turning a profit in cloud computing was “notable” but “the reality is that Google Cloud remains comfortably behind its two most important competitors, and its growth is slowing.” Sales for the unit rose to 28% to US$7.41 billion.
As well, advertisers, who contribute the bulk of Alphabet’s sales, have curtailed their spending in response to a shift by consumers back to in-store shopping in the wake of eased masking and other restrictions. Marketers are experimenting more with new platforms like TikTok, which attracts a more youthful audience.
The company, meanwhile, has been looking to keep a tight control on costs amid recession fears and in January decided to cut about 12,000 jobs. Chief financial officer Ruth Porat told investors on a conference call that she expected capital expenditures this year to be “modestly higher” than in 2022.
Alphabet has otherwise sought to pare spending, including on employee perks and use of company resources. Porat told workers in an internal email in March that they should anticipate additional cost-cutting measures in the coming months.
She said on Tuesday’s call that Alphabet endeavours to “durably engineer our cost base” in order to invest in priorities like cloud computing and artificial intelligence.
Alphabet’s Google unit has been scrambling to keep pace with rivals, notably Microsoft Corp, in rolling out new artificial-intelligence software that can generate long-form responses to queries and other prompts.
Alphabet’s revenue for the quarter ended March 31 stood at US$69.79 billion compared with estimates of US$68.95 billion, according to Refinitiv data.
It reported net profit of US$15.05 billion for the first three months of the year compared with US$16.44 billion a year earlier. – Reuters
