Analyst Estimate Record Google Revenue From Pandemic-Driven Online Spend: WSJ

Wall Street expects Google parent Alphabet Inc GOOG GOOGL to post first-quarter FY21 revenue growth of 25.1% to $51.51 billion from the pandemic-induced surge in digital ad spending despite regulatory restrictions, the Wall Street Journal reports. Profit is estimated to grow 56.7% to $10.72 billion.  

Earnings Thesis: Recently, Snap Inc SNAP Verizon Communications Inc VZ posted significant advertisement-fueled revenue growth. Interestingly, Google’s search engine, Maps, and YouTube have a market share of 92%, 89%, and 73%, respectively.

The pandemic induced remote activities drove higher demand for Google search triggered by takeout meal, grocery-delivery options, and YouTube videos at the cost of the company’s advertisement revenue. Thus, the brands also shifted the ad spending from print, television, and in-store promotions to Google search customers.

Google’s search market share dropped from 61% to 57% last year. In comparison, Amazon.Com Inc AMZN gained market share from 13% to 19% during the period.

Google’s search engine and advertising businesses were also vulnerable to multiple regulatory antitrust lawsuits, including Epic Games and publisher Daily Mail over anti-competitive practices.

Google continues to drive spending to remain the default search engine on iPhones and other devices. Analysts estimated the traffic-acquisition costs to rise 23% to $9.16 billion during the first quarter.

Google also remains invested in the diversification from the core ad business into cloud-computing service to challenge Amazon and Microsoft Corp MSFT. Analysts estimated the recent billion-dollar deals to drive sales by 46% to $4.07 billion for the quarter.

Google’s eight-year, $1 billion-plus contract with Spanish-language broadcaster Univision Communications Inc faced flak over anti-competitive practices. The deal was won in part by packaging, including YouTube and search elements.

Google will be questioned over digital privacy during the analyst call.

Apple Inc’s AAPL recent software update with an anti-tracking feature could compel Google to follow on its Android operating system. All of which can hamper Facebook Inc’s FB.

Price action: GOOG shares traded lower by 0.6% at $2,312.8 on the last check Tuesday.