Alphabet revenue climbs 13%, but company warns of slowing ad sales
Google parent Alphabet (GOOG, GOOGL) reported its Q1 earnings on Tuesday, beating analysts’ expectations on revenue despite the ongoing coronavirus pandemic, and a slowdown in ad revenue in March.
These are the most important numbers from the report, and what analysts were expecting from the company, as compiled by Bloomberg.
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Revenue ex-TAC: $33.71 billion versus $32.6 billion expected
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Earnings per share: $9.87 versus $10.36 expected
Alphabet’s stock was up more than 4% in after hours trading.
Unlike other tech companies like Apple, Alphabet never pulled its quarterly guidance — though there have been indications that the firm is undertaking cost-cutting measures. Taken together, the firm said revenue before traffic acquisition costs (TAC), was up 13% year-over-year thanks to its search, YouTube, and cloud businesses.
Following the earnings release, however, CFO Ruth Porat said the company has seen a slowdown in ad revenue.
“Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues,” she said. “We are sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities.”
Alphabet is, first and foremost, an advertising firm, and the economic tailspin from the coronavirus has already eaten into advertising budgets across the various industries. According to the Interactive Advertising Bureau, 70% of media buyers say they are changing their advertising spending plans as a result of the coronavirus.
Google’s G Suite platform has proven to be a bright spot for the company amidst the coronavirus lockdowns. On April 9, Javier Soltero, Google’s General Manager and VP of G Suite, announced in a blog post that the company was seeing 2 million new users accessing its Meet video service everyday.
For the quarter Google reported cloud revenue of $2.8 billion that’s up from $1.8 billion in the same quarter last year.
According to internal documents obtained by CNBC, Alphabet CEO Sundar Pichai is reportedly moving to reduce hiring and the company’s advertising budget as a result of the current economic climate.
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