Alphabet, Inc (NASDAQ:GOOGL) is a worldwide digital advertising and cloud services company. The company operates in three segments; Google Services, Google Cloud, and Other Bets. The stock has gained 62% year-to-date and 276% over the past five years.
We all know Google, right? Need a sports score? Google it. Migratory habits of penguins? Google it. Need to see Alphabet’s financial statements? You got it — just Google it. But some of us may not be clear just how and from where Google generates its revenues. The vast majority of their revenue comes from advertisements related to Google Search, as shown below in the disaggregation of the company’s revenue for the first three quarters of 2020 and 2021.
Segment (revenue in millions)
Nine months ended September 30 2020:
Nine months ended September 30 2021:
% Total revenue (2021)
Google Search & other
Hedging gains (losses)
When one searches on Google, the ads shown on top are often “pay-per-click” advertisements. This means that the advertisers bid for the top ad space, and then pay Alphabet whenever someone clicks on the ad. This is very effective advertising as consumers who…