Alphabet: Beating estimates, dividend and massive share buyback

One of the largest American technology companies reported results for the 1st quarter of this year, which exceeded analysts’ estimates. Shares responded by jumping as much as 15% in after-hours trading. The company recorded revenues in the amount of 80.5 billion (15.4% y/y) and exceeded the estimate by 1.8 billion. The largest share of revenues was the search segment, which with revenues of 46.2 billion USD grew by 14, 5%. However, higher year-on-year revenue growth was also evident in the YouTube advertising segment, USD 8.1 billion (+21% y/y), and above all in the key cloud segment, which grew by 28.4% year-on-year, and thus had revenues of 9, 6 billion USD. To the high growth of cloud services according to Gen. CEO Sundar Pichai was mainly helped by AI and higher customer investment, indicating good demand for the company’s AI services. Operating profit increased by 46% year-on-year to 25.5 billion and the operating margin increased from 25 to 32%, which was also helped by cost reduction. In addition, Alphabet announced a quarterly dividend of $0.20/share, which would equate to a gross dividend yield of 0.5%, and a share repurchase of $70 billion, which equates to approximately 3.5% of the company’s market cap. We evaluate the report positively.