What happened
Internet tech giant Alphabet (GOOG 0.56%) (GOOGL 0.66%), parent company of Google, delivered a tremendous earnings beat last night, reporting $30.69 per share in earnings where Wall Street had expected only $27.32, and blowing sales forecasts out of the water as well -- $75.3 billion versus $72.1 billion. Alphabet then topped off the good news with a promise to split its stock 20 for 1.
No huge surprise here: Alphabet stock is up 6.3% as of 11 a.m. ET.
Image source: Getty Images.
So what
In its final quarter of the year, Alphabet grew revenues 32%, capping a fiscal 2021 that saw total sales ($257.6 billion) climb 41% year over year. Operating profit margins inched up a single percentage point to 29%. (Operating margins for the year were 31%, however, up 8 full points over fiscal 2020.)
On the bottom line, earnings per share surged 38% for the quarter, and 91% for the year, exceeding revenue growth rates on both counts.
There were only two things that might qualify as "bad news" in the report. First is the fact that YouTube ad revenue growth was only 25%, below overall revenue growth and perhaps indicative of rising competition for viewer eyeballs from the likes of TikTok and Facebook Watch. Second, Alphabet's "other bets" division, which invests in such bleeding-edge ideas as driverless cars, saw revenues decline year over year.
Now what
Still, nitpicking over those minor disappointments feels a bit too much like trying to find fault with a near-flawless quarter. The simple truth of the matter is that Alphabet's Q4 report was wonderful, and, while management did not provide clear guidance on what to expect in the year to come, the fact that Alphabet management chose this moment to announce a 20-for-1 stock split strongly suggests that Alphabet expects the sales and earnings strength to continue in the new year.
Incidentally, Alphabet's share split will replace each $2,900-ish Alphabet share with 20 new shares worth closer to $147 apiece when it goes into effect on July 15, 2022.
