By Wallace Witkowski
Shares of Google parent Alphabet Inc. surged in the extended session Thursday after the tech giant returned to rising ad sales and topped Wall Street estimates with a quarterly earnings report.
Alphabet (NAS:GOOG) (NAS:GOOGL) reported third-quarter net income of $11.25 billion, or $16.40 a share, compared with $7.06 billion, or $10.12 a share, in the year-ago period. Revenue after removing traffic-acquisition costs rose to $38.01 billion from $33.01 billion in the year-ago period. Analysts surveyed by FactSet had forecast earnings of $11.30 on ex-TAC revenue of $35.37 billion.
Alphabet’s class C shares rallied more than 7% after hours, following a 3.3% rise in the regular session to close at $1,567.24.
Advertising revenues rose to $37.1 billion from $33.8 billion, following a two straight quarters of year-over-year declines, which had weighed on Google’s stock. YouTube ad revenue rose to $5.04 billion from $3.8 billion a year ago, while Google Cloud sales rose to $3.44 billion from $2.38 billion.
“Regarding revenue, in the third quarter, we benefited from a broad-based improvement in advertisers spend across all geographies and nearly all verticals,” Chief Financial Officer Ruth Porat said on a conference call. “This is reflected in both search results as well as the rebound in brand advertising spend on YouTube.”
“While we are pleased with our performance in the third quarter, there’s obviously uncertainty in the external environment,” Porat said.
Online ad sales seem to have bounced back in the third quarter from early COVID-19-related weakness, as Pinterest Inc. (NYS:PINS) and Snap Inc. (NYS:SNAP) already disclosed big bumps in ad sales, juiced by greater customer engagement. COVID-19 is far from the only problem for Google, however. Alphabet was hit with antitrust charges from the Justice Department this month , and Chief Executive Sundar Pichai faced withering questions from senators on Wednesday in a committee hearing .
Alphabet shares are up 18% for the year, compared with a 3% gain on the S&P 500 index (S&P:SPX) and a 25% surge in the tech-heavy Nasdaq Composite Index (AMERICAN:COMP) .