Alphabet announces a $70 billion buyback
Alphabet said Tuesday that its board of directors had approved a $70 billion share buyback, a big step up from last year’s $50 billion decision and 2019’s $25 billion decision.
Tuesday’s announcement marks a significant acceleration of Google’s parent strategy of returning shareholder capital through share buybacks.
Alphabet said it would consider the share price and market conditions when deciding whether to buy back its shares.
By 2021, Alphabet will buy more of its shares than any other publicly-traded company except Apple. Facebook’s parent, Meta, is third.
Alphabet shares fell as much as 6% in extended trading after missing expectations for earnings and earnings.
- Earnings per share (EPS): $24.62 per share, compared to the $25.91 expected according to Refinitiv
- Revenue: $68.01 billion versus $68.11 billion expected, according to Refinitiv
- YouTube Ad Revenue: $6.87 billion vs. estimated $7.51 billion, according to StreetAccount
- Google Cloud revenue: $5.82 billion vs. $5.76 billion expected, according to StreetAccount
- Traffic Acquisition Cost (TAC): $11.99 billion versus the $11.69 billion expected according to StreetAccount
- Google’s revenue was $68.01 billion, up 23% from last year. That is a 34% slowdown in growth in the first quarter of 2021 as the economy recovers from the pandemic.
The company reported $54.66 billion in advertising revenue for the quarter, up from $44.68 billion a year earlier. However, YouTube ad revenue for the quarter did not meet analyst expectations. Video sites have been a particular beneficiary of the pandemic as most users at home are using their devices. The omission also comes as TikTok captures the ever-increasing share of the video market on social media.
CFO Ruth Porat said during an analyst call that YouTube has seen “moderate growth,”, especially in direct response ads. The slowdown mainly reflects a difficult comparison with the strength of the first quarter of 2021.
CEO Sundar Pichai tell during the call that YouTube competitor TikTok, dubbed Shorts, now has 30 billion daily views, double the previous quarter and quadruple last year’s figures.
Google’s cloud business was outstanding during the quarter, growing 44% and beating estimates as more and more large enterprises shifted workloads away from their data centers. However, the cloud division was still losing ground, posting an operating loss of $931 million compared to $974 million last year.
During the quarter, Google suspended most of its operations in Russia due to the invasion of Ukraine. As a result, revenue growth in the European region, which includes the Middle East and Africa, slowed to 19% in the first quarter from 33% a year earlier.