Alphabet Inc.

November 16th, 2021 Innovative Companies

INNOVATION WORLD LARGE CAPS

November 2021

Alphabet Inc. is a holding company in the communications sector based in Silicon Valley, California. The company’s businesses include Google Inc. and its Internet products Calico, Nest, SideWalk, GV, Verily, DeepMind, Waymo, Access, Capital, and X. It primarily offers performance and brand advertising through its search engine and Google Ads advertising service.

Focus on Innovation

The innovation focus is on the digital networking of any services and products such as Android, Chrome, Google Cloud, Google Maps, various hardware, and YouTube. Another research focus is artificial intelligence, which will help Google develop new products from various data interfaces. Machine learning and artificial intelligence count as drivers of many of the latest innovations. For example, DeepMind made an AI-powered breakthrough by solving a 50-year-old protein folding problem. This will enable researchers to tackle new and difficult problems, from fighting disease to environmental sustainability.

Financial Report – Highlights of the 3rd Quarter 2021

U.S.-based Alphabet Inc. reported total revenue of $65.1 billion in the third quarter of 2021. This represents a +41% increase in revenue compared to the third quarter of 2020 at $46.2 billion. This exceptional performance was generated by Google’s services, mainly Google advertising at $53.1 billion. Google Cloud contributed with another $5 billion in revenue. In the area of cloud services, the company sees continued momentum with revenue growth of 45% year-over-year in Q3 2021.

For the period July 01 to September 30, 2021, operating income was $21 billion, compared with $11.2 billion in the prior-year quarter. Thus, the profit margin in Q3 2021 was 32%, compared to 24% in Q3 2020. Consolidated net income was $18.9 billion in Q3 2021. Compared with $11.2 billion in the year-ago quarter, Alphabet increased its net income by 68.4%.

Diluted earnings per share increased 70.1% to $27.99 in the third quarter of 2021, compared to $16.40 in the year-ago quarter. At the end of the reporting period, cash and cash equivalents amounted to $23.7 billion and the group had a free cash flow of $18.7 billion.

Sundar Pichai, CEO of Alphabet and Google, said: “Five years ago, I laid out our vision to become an AI-first company. This quarter’s results show how our investments there are enabling us to build more helpful products for people and our partners. Ongoing improvements to Search, and the new Pixel 6, are great examples. And as the digital transformation and shift to hybrid work continue, our Cloud services are helping organizations collaborate and stay secure.”

Every month ALPORA presents an ALPORA Top Innovator for each innovation fund. For each company, a detailed innovation analysis was carried out based on the ALPORA-Methods and the resulting innovation efficiency score was determined.