Google Parent Caps Blockbuster Year

Google parent Alphabet Inc. posted another quarter of strong sales growth, capping a year when profit nearly doubled.

The Wall Street Journal reports the company’s dominance in online search, video and internet ad sales made it one of last year’s leading beneficiaries of an upswing in digital advertising. Last year, small and large businesses alike flooded into the ad market in a bid to win customers who spent early parts of the pandemic sequestered in their homes.

Alphabet on Tuesday reported fourth-quarter revenue of $75.33 billion, an increase of 32% from a year earlier when ad spending began to swell in anticipation that the economy would snap back in 2021 after the Covid-19 pandemic receded. Profit rose by a third, closing out a year when the company’s annual profit increased by almost $36 billion from 2020, more than the 2021 profits of Goldman Sachs Group Inc. and Visa Inc. combined.

The company also said that it would do a 20-for-1 split of its stock. The move comes on the heels of Apple Inc. and Tesla Inc. TSLA -0.58% splitting their own shares in 2020.

The quarterly sales gain was the lowest the company has recorded for a three-month period since late 2020 and marks a deceleration from the 41% increase reported in the July-to-September quarter. The moderating growth has divided investors, with some optimistic Google will extend its momentum over the coming year as Covid-19 wanes and travel returns, while others fear TikTok will dent YouTube’s video dominance and rising costs will cut into margins.

The divide has been apparent in the company’s share performance this year. After rising 65% last year, shares fell more than 10% in January amid a broad market selloff. Shares rose about 8% in after-hours trading on Tuesday.

Much of Google’s growth over the past year came from more e-commerce advertisers eager to reach customers whose product searches begin online. When the pandemic necessitated that local business expand into e-commerce, Google partnered with Shopify Inc. to simplify search listings and ad purchases for millions of merchants.

Total advertising sales rose by a third to $61.24 billion in the December quarter. YouTube was a major contributor with sales of $8.63 billion, bringing its total for the year to $28.85 billion, about $850 million less than Netflix Inc., the streaming-media subscription service.

As the internet’s largest video destination, YouTube now records 15 billion views daily, the company said. The platform has leaned into its position at the forefront of the creator economy, ditching efforts to create premium shows in favor of nurturing homegrown stars such as MrBeast. It plans to spend big over the coming year to maintain its pre-eminence in video by funding a TikTok alternative, YouTube Shorts, and adding live shopping.