Alphabet (GOOGL 0.81%) (GOOG 0.96%) reported strong second-quarter 2021 results after the market close on Tuesday.

Class A (GOOGL) and Class C (GOOG) shares of the Google parent and technology giant popped 3.2% and 0.8%, respectively, in after-hours trading on Tuesday. 

We can attribute the market's positive reaction to both revenue and earnings easily beating Wall Street's consensus estimates. The reaction was probably somewhat muted because the stock market was down on Tuesday. All major indexes closed in the red, with the tech-heavy Nasdaq Composite declining 1.2%. 

Here's an overview of Alphabet's second quarter.

A person works on a laptop in a home office.

Image source: Getty Images.

1. Revenue surged 62%

Alphabet's net sales surged 62% year over year to $61.9 billion, exceeding the $56 billion that analysts had been expecting. In constant currency, revenue increased 57%.

Traffic acquisition cost (TAC) took a $10.9 billion bite out of revenue, up 63% from the year-ago period. 

The company's robust Q2 revenue reflects "elevated consumer online activity and broad-based strength in advertiser spend," CFO Ruth Porat said in the earnings release.

Alphabet was helped considerably by the fact that it had easy year-over-year comparables. As I wrote in my earnings preview, the company's "digital advertising-based [business was] significantly hurt in the year-ago period, which was the first full quarter affected by the COVID-19 pandemic. Many businesses were temporarily closed or operating at less than full capacity in that quarter."

For context, in the first quarter, Alphabet's revenue rose 34% year over year to $55.3 billion.

Here's how Q2 revenue broke out:


Q2 2021 Revenue

Change (YOY)

Google Search and other (advertising)

$35.8 billion


YouTube advertising

$7.0 billion


Google Network (advertising)

$7.6 billion


Google total advertising revenue 

$50.4 billion


Google other

$6.6 billion


Google Services total

$57.1 billion 63%

Google Cloud

$4.6 billion


Other bets 

$192 million


Hedging gains (losses)

$7 million

N/A. Gain of $151 million in year-ago period.


$61.9 billion


Data source: Alphabet. YOY = year over year.

Given the easy year-ago comparables, it makes even more sense than usual to consider sequential growth. Total company revenue and total ad revenue grew a healthy 12% and 13%, respectively, from the first quarter.

YouTube's torrid 84% ad revenue growth led all categories in year-over-year growth. Sequentially, the video streaming platform's ad revenue jumped 17%.  

2. Operating income tripled

Operating income based on generally accepted accounting principles (GAAP) grew 203% year over year to $19.4 billion. Operating margin (operating income divided by revenue) was 31%, up from 17% in the year-ago period.

As with revenue, the company had an easy operating income comparable.

Google Services contributed all the operating income (and then some), as the Google Cloud and "other bets" segments posted operating losses. 

Google Services' operating income jumped 134% year over year to $22.3 million. Google Cloud's operating loss narrowed 59% to $591 million, and other bets' operating loss widened 25% to $1.4 billion. (Segment operating results don't add up to the company's operating income of $19.4 billion because there was $993 million in unallocated corporate costs.) 

3. EPS rocketed 169%

GAAP net income landed at $18.5 billion, up 166% from the second quarter of last year. That translated to earnings per share rocketing 169% to $27.26. Wall Street was looking for EPS of $19.21, so the company sped by the analyst consensus estimate.

Once again, the company had a low comparable bar.

4. Operating cash flow jumped 56%

Alphabet's operating cash flow was $21.9 billion, up 56% from the prior year's quarter. The company ended the period with cash and cash equivalents of $23.6 billion, up from $17.7 billion in the year-ago period.

In short, Alphabet had a great quarter even taking into account that it had easy year-ago comparables.