Google parent company Alphabet will report its fourth-quarter earnings after the bell on Tuesday.
Here’s what Wall Street expects:
Earnings per share (EPS): $27.34, according to Refinitiv
Revenue: $72.17 billion, according to Refinitiv
YouTube advertising revenue: $8.87 billion, according to StreetAccount
Google Cloud revenue: $5.47 billion, according to StreetAccount
Traffic acquisition costs (TAC): $12.84 billion, according to StreetAccount
Alphabet is reporting results shortly after wrapping up a year of outperformance. The stock jumped 65% in 2021, beating all of its Big Tech peers and tripling the gains of the Nasdaq.
Based on analyst estimates, revenue increased about 27% in the fourth quarter from a year earlier, as the company’s dominant search engine and YouTube video service continued to reel in marketing dollars from the top brands.
YouTube has been incorporating more e-commerce features in recent quarters and is experimenting with different formats. It’s been trying to challenge TikTok with a service called Shorts, which CEO Susan Wojcicki said recently hit “5 trillion all-time views” since 2020.
During the quarter, the company announced it would pour more money into its physical real estate, including $1 billion to bolster its London footprint. That’s happening even as Google pushes back its return-to-office plans because of the persistence of the pandemic.
Alphabet also said in the fourth quarter that its self-driving car unit Waymo would expand in additional cities including New York City. Waymo’s primary market has been Phoenix, but its cars recently began flooding the streets of San Francisco streets, where the company has been testing its technology.
Alphabet’s top executives are benefiting handsomely from the strong financial results. The company said last month that four of its highest-ranking leaders, including CFO Ruth Porat, would receive a pay raise from $650,000 to $1 million. More importantly, they’re getting stock awards valued between $23 million and $35 million, split between performance-based equity and shares that vest over time.
But Google has its share of challenges.
Employees are voicing concerns on a host of issues, ranging from Google’s pursuit of a military cloud deal — the Joint Warfighting Cloud Capability (JWCC) program — to vaccine mandates and the impact of inflation. Some are also upset about the internal culture, and say it’s becoming increasingly bureaucratic.
Alphabet’s stock has dropped about 5% since the start of 2022 as Wall Street has hammered tech companies. Google has generally shown that it can withstand economic headwinds better than others in the industry. Investors will be paying particularly close attention to costs, after Google said during the quarter that it’s ramping up hiring.
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