Alphabet is Google's parent company. Making most of its money through internet advertising, there is nothing stopping the tech behemoth from earning more and more money.
While lots of companies around the world are struggling due to the 'COVID-19' coronavirus pandemic that shuttered and/or disrupted many supply chains, Google is like experiencing none of those issues.
In announcing a $50-billion share buyback, Alphabet confirmed that its core advertising business is so profitable and so dominant, that it has few options for usefully deploying its cash.
This surge happens as internet usage in general increases during the pandemic.
Alphabet managed this, as Google's internet search business matures, and YouTube and its cloud computing business are becoming the two largest growth outside of Google Search.
This helped and boosted Alphabet's earnings to a height never previously seen.
In the first quarter of 2021, YouTube advertising revenue climbed 49% to $6.01 billion, topping estimates of $5.66 billion. At the same time, Google cloud-computing revenue rose 46% to $4.05 billion with estimates of $4.07 billion.
Google's gross revenue, excluding traffic acquisition costs, jumped 34% to $55.31 billion in the quarter ended March 31. This topped estimates of $51.53 billion.
"Total revenues of $55.3 billion in the first quarter reflect elevated consumer activity online and broad based growth in advertiser revenue," said Ruth Porat, CFO of Alphabet.
As for its internet search and other revenue, they rose 30% to $31.88 billion, with estimates of $29.8 billion.
These numbers are record profits.
The company reported a net income of $17.93 billion, which is a huge jump from the $6.84 billion it had reported around the same time in 2020.
With the company reported record earnings, the company is left with cash reserve at about $135 billion, or an increase of $18 billion since 2020.
Another advantage at Alphabet is that, the company has saved more than $1 billion per year, after it started allowing its employees to work from home.
As employees work from home and aren't traveling anywhere near as much as they used to before the pandemic, Google said that it saved $268 million during the first quarter of 2021 alone, due to a reduction in expenses from travel and entertainment.
Google is known for giving lots of perks to its employees. The company's offices are usually packed with food and corporate retreats. By allowing employees to work from home, Google can save lots of money from its many offices, as spending on those perks are significantly lowered.
The company also said that advertising and promotional expenses also fell by $1.4 billion due to reduced spending, paused or rescheduled campaigns, and online-only events.
After the announcement, Google's stock rose nearly 3% on the stock market.
In the company's filing, the company said the decrease in money spent in those areas was “primarily as a result of COVID-19.”
With COVID-19 restrictions, people spent more of their time online, exposed to Google trackers and ads.
As the restrictions started to lift, more people are booking trips and hotels online, which is also very good for Google’s advertising business.
And with Google’s employees working most of their days at home, Google is saving more money, which is also good for its business.
"Over the last year, people have turned to Google Search and many online services to stay informed, connected and entertained," said Alphabet CEO Sundar Pichai in a statement. "We’ve continued our focus on delivering trusted services to help people around the world."
Alphabet's profitability and increased performances in the stock market, has made its founders, Larry Page and Sergey Brin, centibillionaires.
