Google parent Alphabet has announced its earnings for the first quarter earnings for 2020. During the quarter ending March, Alphabet reported revenue of $41.16 billion and earnings of $9.87 per share. The company missed on earnings but beat the revenue projections for the quarter. However, the real highlight of this earnings result were the assurances offered by the company executives. The effect of COVID-19 outbreak on advertising revenue was not as bad as anticipated by the analysts.
With revenue growth 13 percent from the previous year, Alphabet stock saw a jump of 3 percent. CNBC reports the stock went up more than 7 percent in extended trading on Tuesday. Alphabet also revealed that Cloud revenue came in at $2.78 billion during the quarter. The YouTube advertising revenue was $4.04 billion while traffic acquisition costs were at $7.45 billion. Alphabet executives revealed that a difficult quarter is ahead but also suggested that things have improved.
Alphabet revenue beats estimates in Q1
During the earnings calls, Alphabet CFO Ruth Porat revealed that March may have been the worst hit. Porat added that the company saw abrupt decline in ad revenues in March. The company also assured investors that things did not get worse in April. “Based on our estimates from the end of March through last week for Search, we haven’t seen further deterioration in the percentage of year-on-year revenue declines.”
Sundar Pichai, CEO of Alphabet, said that people are using Google services as they are staying at home. He added that Android app downloads have risen 30 percent from February to March. Pichai also revealed that YouTube watch time has “significantly increased”. He also noted that 100 million students and educators are now using Google Classroom. The company sees search to recover quickly while it continues to cut cost during the quarter.
Alphabet investors expected much worse slowdown in revenue during the first quarter of this year. However, the company delivered a surprise revenue beat despite slowdown. While executives did not paint a rosy picture for the next quarter, it seems prepared to battle the impact of coronavirus pandemic. The increase in Google’s total advertising revenues and growth in YouTube ad revenue are positive signs. However, it will remain difficult to gauge the impact of the pandemic on Alphabet’s different businesses.