Alphabet, Google’s parent company, reported higher than expected Q3 ad sales, signaling that the business has found a way to overcome the limitations of tracking mobile users and that online shopping is booming as we usher in the holiday season.
Through YouTube video services, its search engine, and partnerships on the internet, Google sells more internet ads than any online company. The demand for its services went up when the pandemic forced people to quarantine, which led to more online shopping, if only for convenience.
It would seem that even as lockdown eases, online shopping habits persist.
Beating the estimates
The average estimates by analysts tracked by Refinitiv stood at $63.3 billion. However, Google’s ad revenue rose by 41% to $53.1 billion in the third quarter. The overall sales by Alphabet went to $65.1 billion, beating the estimates.
Philip Schindler, Google’s chief business officer said that the consumer shift to digital is ‘real and will continue’ even as people return to stores.
He added that the key takeaway is that people want more choice, more information, and flexibility, something the company does not want to see reversed.
Despite challenges, Google lumbers on
Shares went down by 0.93% to $2,760.19 following the after-hours release of the results. The quarterly profit was $18.936 billion ($27.99 per share), exceeding the estimates ($24.08 per share) and making this the third straight quarter of record profits.
Alphabet’s profits tend to fluctuate because accounting rules mean the company has to measure unrealized gains from the investments it makes in startups as income.
Investors braced for sales challenges for the company, as people become aware of the criminal and invasive nature of how it collects information and targets users with ads. As Apple gave its users control over tracking, advertisers changed their spending but that did not stop the world’s biggest ad company from making money.