Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

A Google building looms over a Manhattan street on Oct. 20, 2020.

CARLO ALLEGRI/Reuters

Google parent Alphabet Inc on Thursday powered back to sales growth, beating analysts' estimates for the third quarter as businesses initially hobbled by the coronavirus pandemic resumed advertising with the internet’s biggest supplier of ads.

Alphabet shares, up 13 per cent on the year, rose 8.5 per cent after hours to $1,689.89.

Google’s billions of users are spending more time online transacting and entertaining themselves this year as they try to avoid the virus.

Story continues below advertisement

But many advertisers ceased spending in the second quarter as travel and leisure activity disappeared. As the global economy in the third quarter began to chug along again, advertisers flocked to Google to let shoppers know about deals and adjusted service offerings. Google also gained from political ad spending ahead of the U.S. presidential election on Nov. 3, advertising analysts said.

Ad sales surged across all regions and industries, Alphabet Chief Financial Officer Ruth Porat said. For instance, U.S. revenue grew 15 per cent in the third quarter compared with 1 per cent in the second quarter.

Porat declined to say whether the trend was sustainable in the fourth quarter, with Europe and other areas once again locking down because of significant increases in infections.

“While we’re pleased with our performance in the third quarter, there is obviously uncertainty in the external environment,” Porat said.

Google rival Facebook Inc warned on Thursday that the recent bump in online shopping, which has been good for online ad sellers, may not carry through next year.

Google’s cloud business was about flat with the second quarter, as were the company’s sales of apps, hardware and content subscriptions.

Alphabet said it would elevate cloud into a separate reporting unit starting in the fourth quarter, effectively dropping cloud financial results from its Google unit and giving investors their first view into the business' profitability.

Story continues below advertisement

Porat told financial analysts the company would not slow down spending on the cloud unit, even though another round of COVID-19 lockdowns may hit ad demand.

“We are investing aggressively in cloud, given the opportunity that we see and frankly the fact that we were later relative to peers,” she said.

AD REBOUND

Alphabet’s bounce-back followed its first sales decline compared with a year-earlier period in the second quarter, since going public in 2004.

Third quarter sales were $46.2 billion, up 15 per cent from a year ago, compared with the average estimate of $42.9 billion, or 5.9 per cent growth, among analysts tracked by Refinitiv.

Alphabet’s profit was $11.2 billion, or $16.40 per share, compared with the average estimate of $7.698 billion, or $11.18 per share. Earnings benefited from cutbacks in marketing and travel and in particular a 20 per cent drop in spending on equipment and workspace construction.

Google ad sales accounted for 80 per cent of Alphabet’s revenue, with bumps across each of the ads businesses where Google technology dominates the online landscape, including search, YouTube and the broader web.

Story continues below advertisement

The ubiquity and popularity of Google services has become a liability for the company. The U.S. government last week sued the company for operating a search monopoly and stifling competition. Other regulators in the United States and elsewhere have raised concerns about user privacy and censorship.

The various cases could lead to Google having to make costly changes to its bureaucracy and technology. But Alphabet Chief Executive Sundar Pichai said Thursday that resolving the complaints would create “certainty, clarity and opportunities.”

U.S President Donald Trump referenced his administration’s lawsuit in a campaign video released on Wednesday, saying “Big Tech has to be spoken to and probably in some form has to be stopped because they’re taking away your rights.”

Facebook, Amazon.com Inc and Twitter Inc also released financial results on Thursday that were above expectations, showing how internet companies have fared well through the pandemic. Facebook shares on Thursday were up 30 per cent this year, Amazon 71 per cent and Twitter 51 per cent.

Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies