Apparently, 2021 has been a great year for the giant Alphabet. This is because the holding company, which controls the Google, broke the sales record in the first quarter and announced, last Tuesday (27), a revenues of US $ 55,3 billion - a 34% increase over the same period in 2020.

The unprecedented mark in the number of sales made it possible for Alphabet to record a net profit of US $ 17,93 billion, which corresponds to a 162,3% increase in relation to the first three months of last year.

advertising

The robust gains reflect the investment made by the company in advertising digital. With the quarantine, due to the coronavirus pandemic, people turned to Google to find meals, travel and remote solutions, or even YouTube, as an alternative to entertainment.

Naturally, companies explored the digital medium to promote advertising for their businesses, and Alphabet, which also owns the YouTube, benefited from it.

No wonder, US $ 44,7 billion - which corresponds to 80,7% of Alphabet's total turnover - came from the company's digital advertising business. Of that amount, $ 31,9 billion was derived from advertisements related to Google Search, while $ 6,8 billion came from YouTube advertising.

Alphabet logo displayed on smartphone
Alphabet reaps rewards after spending more on digital advertising. Photo: nikkimeel / Shutterstock

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Thanks, Google

If Alphabet's result is surprising, much is due to Google's good performance. Ad sales on the search site increased by about 32% in the first quarter of 2021, a key factor in the record sales of its holding.

The performance was so positive that Alphabet announced a $ 50 billion repurchase of Google shares, fulfilling the wishes of investors who were watching the company's growing cash reserves.

Google's results could be even more positive, but the company's share in the search market fell from 61% to 57% last year. In return, the participation of the Amazon grew from 13% to 19%.

In addition, the search service has been sued by the Justice Department and a separate coalition of states, accused of closing secret deals to favor its search engines and advertising companies.

Even so, the result exceeded the expectations of analysts monitored by Refinitiv. Good for Alphabet.

Source: The Wall Street Journal/Value Invest