Alphabet Q3 consolidated revenue zooms 41% to $65 billion

SVP and CFO Ruth Porat noted that the company's revenue performance in the quarter was rooted in advertiser spend, elevated consumer online activity and Google Cloud

by exchange4media Staff
Published: Oct 28, 2021 8:27 AM | 2 min read

Alphabet, Google's parent company, has reported a 41% growth in consolidated revenues at $65.1 billion for the third quarter ending September. The total cost of revenues was $27.6 billion, up 31%, primarily driven by growth in Traffic Acquisition Cost (TAC), which was $11.5 billion, up 41%.

“Our revenue performance in the third quarter reflects continued broad-based strength in advertiser spend and elevated consumer online activity as well as a strong contribution from Google Cloud,” Alphabet Senior Vice President and Chief Financial Officer Ruth Porat.

Operating expenses were $16.5 billion, up 19%. The increase in R&D expenses were driven primarily by headcount growth. The growth in sales and marketing expenses were driven by headcount growth, followed by the continued ramp-up of spending on ads and promo in contrast to the pull back in the third quarter last year. Finally, the increase in General and Administrative Expenses (G&A) reflects the impact of charges relating to legal matters, followed by headcount growth.

Operating income was up 88% to $21 billion, while operating margin was 32%. Other income and expense was $2 billion, which primarily reflects unrealized gains in the value of investments and equity securities. Net income was $18.9 billion.

“We continue to generate strong free cash flow of $18.7 billion in the quarter, and $65.7 billion for the trailing 12 months. We ended the third quarter with $142 billion in cash and marketable securities,” Porat said.

Total Google Services revenues were $59.9 billion, up 41%. Google Search and other advertising revenues of $37.9 million in the quarter were up 44%, with broad-based strength across our business, led by strong growth in retail.

YouTube advertising revenues of $7.2 billion were up 43% due to strength in both direct response and brand advertising. The deceleration in the growth rate versus the second quarter was driven by lapping a strong recovery in brand in the third quarter of last year.

“Network advertising revenues of $8 billion were up 40%. Other revenues were $6.8 billion, up 23%, driven by growth in YouTube non-advertising revenues and hardware, which benefited from the addition of Fitbit revenues. Google Services operating income was $24 billion, up 66% and the operating margin was 40%,” Porat said.