First-quarter revenue rose 34% year over year, landing at $55.3 billion. Earnings jumped from $9.87 to $26.29 per diluted share. Your average analyst would have settled for earnings near $15.88 per share on top-line sales of roughly $51.7 billion. The targets themselves have been moving up recently. Consensus earnings estimates for this period sat at $13.84 per share three months ago, before 11 analyst firms boosted their projected earnings.
Behind the headline numbers
Some of the bottom-line gains came from an accounting adjustment. Alphabet extended the useful lives of its server hardware from three to four years while stretching the useful life of some networking equipment from three to five years. These adjustments increased diluted earnings by $0.95 per share.
The rest of the positive surprises rested on strong business results. First-quarter sales surged at least 33% higher in each of Alphabet's four geographic regions, led by a 44% gain in the Asia-Pacific region. YouTube ad sales rose 49% to $6.0 billion and Google Search revenues increased by 30% to $31.9 billion. But in general, Google search has simply become even more popular during the pandemic.
"People have turned to Google Search more than ever since the pandemic began," CEO Sundar Pichai said on the earnings call. "We see hundreds of millions of searches every day for COVID and related health information. People are also searching for jobs. To help them, job seekers can now use search to quickly and easily find roles that do not require a college degree. We are working together with top employment websites to make this service even better."
Both Class A and Class C shares of Alphabet traded 4.6% higher at 5 p.m., EDT. At these prices, the pair of FAANG stocks have gained approximately 88% in 52 weeks.