Rebound in ad sales boosts Google parent Q3 revenues by 15%

Technology giant Google’s parent company Alphabet on Thursday reported a 15% increase in quarterly revenues, on the back of broad-based growth in its advertisements business across Search and YouTube, as well as Google Cloud and Play.

Sales from Google advertising, which constituted about 80% of the company’s reported revenues in the third quarter, stood at $37.1 billion, up 10% year-on-year.

The Mountain View, California-based company said its revenues rose to $46.2 billion in the third quarter ended September 2020, from $40.5 billion a year earlier.

Its profits stood at $11.2 billion, or $16.40 per share, compared to $7.1 billion, or $10.12 per share, a year ago.

“With the world accelerating its transition to online and digital services, in Q3, we also saw strength in Google Cloud, Play and YouTube subscriptions. This is the third quarter we are reporting earnings during the Covid-19 pandemic,” CEO Sundar Pichai said in the earnings call.

Alphabet’s Google Cloud sales, which made up about 8% of the revenues, rose 45% to $3.4 billion in the quarter. The unit includes sales from Google Cloud Platform and Google Workspace, the recently rebranded G Suite service offerings.

Google Workspace includes collaborative work tools such as Gmail, Drive, Calendar, Meet, Docs, Sheets and Slides. Video conferencing tool Meet, Pichai said, saw a peak in the third quarter, with 235 million daily meeting participants and over 7.5 billion daily video call minutes.

Pichai said that Google Cloud business is driven by broad trends. First, as the shift to digital accelerates, data processing and analytics is one of the fastest growing segments of the market.

“BigQuery, which provides real-time and predictive analytics, is winning retailers like Best Buy, helping them create better experiences for shoppers. Customers value our differentiated AI/ML-based industry-specific solutions. This is leading to significant wins with brands like Unilever, Amwell and Reckitt Benckiser,” Pichai said.

He added that the unit is currently working with the United States Navy to modernise maintenance operations for vessels and facilities, the Department of Defense to help military doctors with cancer detection research, and the Department of Energy to help scale research efforts across national labs and field sites.

Additionally, he said that the Google Cloud business will break out from the current structuring of financials at Alphabet to report its own, separately, effective fourth quarter.

The report of rebound in sales in Google’s advertising business comes a week after the United States government’s Department of Justice (DoJ) sued the technology giant for operating a search monopoly.

The DoJ, in a suit filed on October 20, had alleged that the company is “unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States.”