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Alphabet (Google) share price up following massive Q1 beats

We examine the highlights from the search giant’s first quarter results, released on Tuesday, 27 April.

Q1 Earnings Report: The Highlights

Alphabet – parent of Google (ticker: GOOG) – on Tuesday illustrated its unparalleled levels of dominance in internet search, reporting massive Q1 beats across the top and bottom-lines.

The company reported total revenues for the quarter ending March 31 of $55.3 billion, implying a year-on-year growth rate of 34%.

When stripping out traffic acquisition costs, Alphabet reported ex-TAC revenues of $45.6 billion, well ahead of Wall Street’s $42.6 billion consensus estimates, according to Yahoo Finance.

The search giant also beat on the bottom-line, revealing earnings per share (EPS) of $26.29. Analysts were expecting EPS of just $15.64, according to Yahoo Finance.

Alphabet (Google) Share Price up After-Hours

Investors responded bullishly to the Q1 report: The stock was up 4.35% or $100.43 to $2,407 per share in after-hours trade – a price which would represent an all-time high for the company.

These figures not only reiterate the search giant’s dominance, but go a long way in explaining its valuation. GOOG last traded at 38.54x earnings, firmly ahead of its advertising FANG peer Facebook (ticker: FB) and well ahead of the market.

Other highlights from the results included: sequentially higher operating margins of 30%, net income of $17.930 billion, and cloud revenues of $4.04 billion, marking another quarter of solid double-digit growth.

Finally, with Alphabet's cash pile standing at around $135 billion, the company also revealed a freshly authorised buyback program valued at upto $50 billion.

'The repurchases are expected to be executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions,’ the company noted.

Management Commentary

Alphabet’s management seemed to play down the enormity of the Q1, instead focusing on the social good that Google’s suite of products contribute to the world. Alphabet and Google CEO, Sundar Pichai, commented:

'Over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained. We've continued our focus on delivering trusted services to help people around the world. Our Cloud services are helping businesses, big and small, accelerate their digital transformations.'

By comparison, group CFO, Ruth Porat, honed in on the operational performance of the search giant during the quarter, saying:

'Total revenues of $55.3 billion in the first quarter reflect elevated consumer activity online and broad based growth in advertiser revenue. We're very pleased with the ongoing momentum in Google Cloud, with revenues of $4.0 billion in the quarter reflecting strength and opportunity in both GCP and Workspace.'

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