Alphabet announced its financial results for the financial year 2021 on 1st February 2022. The financial year ended on 31st January 2021 and despite the adversities faced during the COVID-19 pandemic, it reported annual revenue of $200 billion in 2021.
The company set a new record for annual revenue despite the issues going on with the global supply chain as well. In comparison to the 2020 annual revenue i.e. $183 billion, it reported $257 billion at the end of the fiscal year 2021. This is a 41% jump in the YOY revenue growth of the company.
Sundar Pichai, CEO of Alphabet, attributes this whopping increase of revenue to investments made in AI and its advertising business. He stated, “Our deep investment in AI technologies continues to drive extraordinary and helpful experiences for people and businesses, across our most important products. Q4 saw ongoing strong growth in our advertising business, which helped millions of businesses thrive and find new customers, a quarterly sales record for our Pixel phones despite supply constraints, and our Cloud business continuing to grow strongly.”
Along with the financial results of 2021, Alphabet announced a 20-for-one stock split that will take effect in July. Shareholders will be given nineteen new shares for every share that they hold.
Sources of Revenue Q4 2021
Google had an advertising revenue of $61.24 billion including Google search, YouTube ads and Google Network in the last quarter. Total Google Services revenue was $69.4 billion. Q4 2021 also reported $75.3 billion quarterly revenue, an increase of around 32% from Q4 2020.
Effect of Apple’s Change in Privacy Policy
Apple’s iOS 14.5 update introduced a lot of new features like face unlock while wearing a mask, new emojis, etc. Among these, the App Tracking Transparency feature allows users to choose whether applications and websites can track them or not. The unavailability of this feature affected advertisers as they couldn’t target users. As a result of this setting, Facebook (Meta), Snapchat, Twitter and YouTube lost $10 billion in revenue in the second half of 2021 according to theverge.
This policy change did not affect Google a lot as it collects its own data via search traffic and YouTube. The company brought $8.63 billion in revenue in Q4 2021 via YouTube ads.
Revenue Growth from Google Cloud
Although Alphabet reported 45% year-over-year growth in Google Cloud’s revenue, it generated losses of $890 million in Q4 and $3.1 billion in 2021. This did not dishearten Alphabet as they chose to focus on the brighter side i.e. the annual revenue.
CEO Sundar Pichai also revealed that Alphabet’s backlog revenue increased to $51 billion, most of which is assigned to commitments to spend on Google Cloud.
Alphabet’s annual revenue in 2020 and 2016 was $183 billion and $90 billion, respectively. With steady growth in five years, the company has almost tripled its revenue in 2021.