GOOGL Q1 Earnings Beat Estimates, Revenues Rise Y/Y, Stock Up

Alphabet’s GOOGL first-quarter 2025 earnings of $2.81 per share beat the Zacks Consensus Estimate by 39.11%. The figure grew 48.7% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Revenues of $90.234 billion increased 12% year over year (14% at constant currency).

Net revenues, excluding total traffic acquisition costs (“TAC”) (the portion of revenues shared with Google’s partners and the amount paid to distribution partners and others who direct traffic to Google’s website), were $76.486 billion, which surpassed the consensus mark by 1.27%. The figure rose 13.2% year over year.

TAC of $13.784 billion rose 6.2% year over year.

Alphabet Inc. Price, Consensus and EPS Surprise

Alphabet Inc. price-consensus-eps-surprise-chart | Alphabet Inc. Quote

GOOGL shares were up roughly 4% in pre-market trading on Friday, reflecting strong results. Google Cloud revenues surged 28.1% year over year to $12.260 billion and accounted for 13.6% of the quarter’s total revenues. The figure beat the Zacks Consensus Estimate by 0.85%.

Google Cloud revenue growth benefited from strong GCP growth and a solid demand for artificial intelligence (AI) infrastructure and generative AI solutions.

GOOGL’s Services Ride on Search & YouTube

Google Services revenues increased 9.8% year over year to $77.264 billion and accounted for 85.6% of total revenues. The figure beat the Zacks Consensus Estimate by 1.56%.

Google advertising revenues rose 8.5% year over year to $66.885 billion and accounted for 74.1% of total revenues. The figure surpassed the consensus mark by 0.9%. 

Search and other revenues grew 9.8% year over year to $50.702 billion, surpassing the Zacks Consensus Estimate by 0.83%. Search and other revenues accounted for 65.6%, 75.8% and 56.2% of Google Services, Google Advertising and total revenues, respectively. YouTube’s advertising revenues improved 10.3% year over year to $8.972 billion, which beat the consensus mark by 0.31%.

Alphabet is leveraging AI to boost search dominance with the launch of Gemini 2.5. Search revenues benefited from continued strong growth, boosted by the engagement with features like AI Overviews, which now has 1.5 billion users per month.

However, Google Network revenues decreased 2.1% year over year to $7.256 billion but beat the consensus mark by 2.69%.

Google subscriptions, platforms and devices revenues, formerly known as Google Other revenues, were $10.396 billion in the first quarter, up 18.8% year over year. The figure beat the consensus mark by 4.12%.

Other Bets’ revenues were $450 million, down 9.1% year over year, and accounted for 0.5% of the first-quarter revenues. The figure missed the consensus mark by 6.75%.

GOOGL’s Operating Margin Expands Y/Y

Costs and operating expenses were $59.628 billion, up 8.3% year over year. As a percentage of revenues, the figure declined 230 basis points (bps) on a year-over-year basis to 66.1%.

Total cost of revenues increased 16.76% year over year to $36.361 billion. 

The operating margin was 20.2%, which expanded 230 bps year over year. 

Segment-wise, Google Services’ operating margin of 42.3% expanded 270 bps year over year.

Google Cloud’s operating income was $2.177 billion compared with $900 million reported in the year-ago quarter.

Other Bets reported a loss of $1.226 billion compared with a loss of $1.02 billion in the year-ago quarter.

Alphabet’s Balance Sheet Remains Strong

As of March 31, 2025, cash, cash equivalents and marketable securities were $95.328 billion, down from $95.657 billion as of Dec. 31, 2024.

Long-term debt was $10.886 billion as of March 31, 2025, compared with $10.883 billion as of Dec. 31, 2024.

Alphabet generated $36.15 billion of cash from operations in the first quarter of 2025 compared with $39.113 billion in the fourth quarter of 2024. GOOGL spent $17.197 billion on capital expenditure, netting a free cash flow of $18.953 billion in the reported quarter.

Solid liquidity is helping aid Alphabet’s strong balance sheet as the board declares a quarterly dividend of 21 cents per share, representing a 5% increase from the previous quarter’s dividend of 20 cents.

On April 23, 2025, Alphabet’s board of directors authorized the company to repurchase up to an additional $70.0 billion of its Class A and Class C shares.

Zacks Rank & Stocks to Consider

Alphabet currently carries a Zacks Rank #3 (Hold).

StoneCo STNE, Baidu BIDU and Qorvo QRVO are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector. While StoneCo sports a Zacks Rank #1 (Strong Buy), Baidu and Qorvo carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

StoneCo shares have appreciated 68.5% year to date. StoneCo is set to report its first-quarter 2025 results on May 8.

Baidu shares are up 6.2% year to date. Baidu is slated to report its first-quarter 2025 results on May 21.

Qorvo shares have lost 9.1%, year to date. Qorvo is scheduled to report its fourth-quarter fiscal 2025 results on April 29.

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