Google parent company Alphabet delivered a blockbuster third quarter as advertising dollars return to YouTube and Search. Google CEO Sundar Pichai also revealed on the call with analysts that Google will break out cloud revenue as a separate reporting segment starting with its Q4 2020 results.
As for the numbers, the tech giant reported a net income of $11.2 billion, up 22% from $7 billion a year ago, on earnings of $16.55 per share. Diluted earnings per share came to $16.40 on revenue of $46.2 billion, up 14% year-over-year. On average, Wall Street was looking for Q3 earnings of $11.21 per share with $42.88 billion in revenue.
As usual, Google revenues attributed most of Q3 sales with $46.01 billion in revenue. Advertising generated the most revenue for Google, and the company said revenues are rebounding from a pandemic-induced decline. In Q3, Google ad revenues came to $37.09 billion, compared to $29.867 billion last quarter. Ad revenue were $33.92 billion in Q3 2019.
Google Search and other ad revenue (excluding YouTube) also increased, with sales climbing to $26.3 billion in Q3. Revenue for YouTube ads rose significantly quarter-over-quarter, from $3.812 billion in Q2 to $5.03 billion in Q3.
In Alphabet's moonshot "Other bets" category, revenue came to $178 million while the operating loss reached to $1.1 billion. Google announced in the first quarter that it would down hiring for the rest of 2020. The headcount at the end of the third quarter was 132,121.
Google Cloud break out
Google's cloud revenue continues to climb and the tech giant is now promising to provide more revenue data, including operating segments, for Google Cloud.
"I'm working with Ruth and Thomas Kurian to make investment decisions to drive progress here," Pichai said. "As we have told you on these calls, given the progress we are making and the opportunity for Google Cloud in this growing global market, we continue to invest aggressively to build our go-to-market capabilities, execute against our product road map and extend the global footprint of our infrastructure. With this segmentation, you will additionally see information about the scale of our investments, which help you gauge the progress we are making on the multiyear path ahead to create sustainable value."
Google Cloud -- which includes Google Cloud Platform (GCP) and Google Workspace (formerly G Suite) -- brought in $3.44 billion, up from $2.38 billion a year prior and $3.007 billion the previous quarter. Google Cloud now has an annual revenue run rate of $13.6 billion.
"Our strength in multi-cloud is an advantage here," Pichai said on the call with analysts. "This is helping us win large data center and IT transformation deals."
Also of note, Google said that Google Meets saw a peak in Q3 of 235 million daily meeting participants and more than 7.5 billion daily video call minutes.
"Total revenues of $46.2 billion in the third quarter reflect broad based growth led by an increase in advertiser spend in Search and YouTube as well as continued strength in Google Cloud and Play," said Ruth Porat, CFO of Alphabet and Google. "We remain focused on making the right investments to support long term sustainable value."
Shares of Alphabet were up as much as 7% after hours.