Google Parent Alphabet Posts Mixed Q1 Results After "Significant Slowdown" In Ads

Marco Green
April 30, 2020

And Google's other revenues-which include its poorly-performing hardware business plus Play Store and non-advertising YouTube revenues-contributed $4.4 billion, up from $3.6 billion in the year-ago quarter. The business segment recorded US$8.9 billion in sales in 2018, up 53 per cent from the previous year. "As of today, we anticipate that the second quarter will be a hard one for our advertising business".

"Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues", said Ruth Porat, Alphabet and Google's chief financial officer.

CEO Sundar Pichai said the cloud business was still strong, even if some deals were taking longer to complete.

Alphabet's first-quarter profit was $6.8 billion (roughly Rs. 51,500 crores), or $9.87 (roughly Rs 750) per share, compared with the analysts' average estimate of $7.21 billion (roughly Rs. 54,600 crores), or $10.40 (roughly Rs 790) per share.

Additionally, the report indicated that 74% of respondents believed Covid-19's impact on ad spend will be much more severe this year and next, compared to the financial crisis during 2008-2009. As for what happens next quarter, Google's CFO Ruth Porat said it was going to be a hard quarter for the advertising business, which remains the company's biggest revenue driver by a big margin.

Alphabet reported first-quarter revenue that rose more than expected, showing demand for advertising was relatively high in the months before the coronavirus pandemic hit the online search giant's customers.

YouTube generated $4.04 billion in ad revenue for the first quarter of 2020, up 33% from the year prior. "Some social norms will change and many businesses are speaking to us, looking to reinvent their operations", Pichai said. "People are relying on Google's services more than ever, and we've marshaled our resources and product development in this urgent moment".

Google has seen a significant rise in search activity. In particular, usage of Google Search spiked and the coronavirus-related search activity was reportedly four times bigger than the peak of the Super Bowl search activity.

YouTube watch time also has significantly increased, particularly livestreams. Alphabet's ad business should recover once the global economy "normalizes" post-pandemic, but she said it was "premature to comment on timing given all the variables here".

The company did not release the number of paid subscribers for YouTube services, after revealing it had 20 million last quarter.

"Although we are focused on these and other steps to moderate the overall pace of investment, we remain committed to the long-term opportunities for which we are well positioned", she said.

Alphabet also now anticipates a modest decrease in its total capital expenditures this year. Direct response ads on YouTube, which often entice viewers into buying something, "continued to have substantial year-on-year growth throughout the entire quarter", she added.

On the Q1 revenue beat, shares of Alphabet rose almost 4% in after-hours trading Tuesday.

Other reports by Click Lancashire

Discuss This Article