Alphabet Inc. (GOOGL) reported better than anticipated fiscal 2024 first-quarter earnings and revenues against the backdrop of the stunning performance of its cloud business division. The search engine giant also announced its initial dividend and a massive share repurchase program. The stock of Alphabet ended Friday’s trading session at $173.69, up $15.74, or 9.97%, from the prior close.
The Mountain View, California-based company reported first-quarter revenues of $80.54 billion, an increase of 15.40% from $69.79 billion in the comparable quarter of fiscal 2023.
For the first quarter, which ended March 31, 2024, Alphabet posted net income of $23.66 billion, or $1.89 per share, compared with $15.05 billion, or $1.17 per share, in the quarter that ended March 31, 2023.
Analysts surveyed by LSEG had anticipated Alphabet to report earnings of $1.51 per share on revenues of $78.59 billion.
Segment wise,
- Google services revenues surged 13.61% y-o-y to $70.40 billion. Specifically, YouTube Ad revenues grew by 20.90% y-o-y to $8.09 billion, beating forecasts of $7.72 billion. Google search revenues increased about 15% to $46.16 billion. Google subscriptions, platforms, and devices revenues were $8.74 billion, an increase of about 18% on a y-o-y basis.
- Google cloud revenues were $9.57 billion, an increase of 28.44% from last year. Analysts surveyed by StreetAccount anticipated revenues of $9.35 billion.
- Other bets revenues grew to $495 million from $288 million.
Traffic acquisition costs (TAC) were $12.95 billion, versus $12.74 billion anticipated by StreetAccount analysts. Similarly, Alphabet’s capital expenditure increased to $12 billion, surpassing forecasts of $10 billion. Notably, the company’s CFO, Ruth Porat, stated that a similar amount would be spent every quarter for the remaining year. This implies that capital expenditures would rise to $48 billion in Q1 2024 from $32.30 billion in Q1 2023.
The company’s cumulative ad revenues, which account for over 75% of Alphabet’s top line, were $61.66 billion in 1Q 2024, an increase from $54.55 billion in the previous year and higher than forecasts of $60.20 billion. Alphabet ended the first quarter with cash, equivalents, and marketable securities of $108 billion, a slight decrease from $110.9 billion in the previous year.
Considering the sharp increase in earnings spanning its core business divisions, Alphabet announced a cash dividend of $0.20 per share, payable on June 17, this is in addition to a $70 billion share repurchase program. Alphabet would spend $2.50 billion on a cash dividend. The board also stated that it intends to pay cash dividends in the upcoming quarters.
The upbeat quarterly results and dividend declaration are expected to keep Alphabet’s stock slightly bullish in the near term.
The historical price chart indicates that the stock of Alphabet has formed a bullish gap pattern on the chart. The stock is expected to consolidate before rising further. Additionally, the stochastics RSI indicator is also in the bullish zone. Therefore, we anticipate a continuation of the current uptrend in the near term.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
