Alphabet beats Wall Street expectations with Q1 earnings but sees ‘significant’ slowdown in ad revenue (GOOG, GOOGL)
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.
Revenue ex-TAC: $33.71 billion versus $32.6 billion expected
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.
A drop in Google ad sales steadied in April and some consumers returned to using the search engine for shopping in addition to finding novel coronavirus information, parent Alphabet Inc said on Tuesday, sparking an 8% rally in shares.
The share rally to $1,329.81 after hours brought the stock almost back to where it started the year.
Some financial and advertising analysts had estimated ad sales declines of up to 20% in the coming quarters, with hotels, airlines, film studios and other big spenders cutting ad buy because of the coronavirus pandemic.
But Alphabet said search ads, its most lucrative business, saw revenue decline by a mid-teens percentage in late March compared with a year earlier and that the slowdown did not worsen this month.
The company also is working to lure money from advertisers that normally sponsor sporting events canceled by the coronavirus.
“While, obviously, there’s an impact on the economy and we’re not immune to that, the engagement from advertisers across our products and with our teams has been very robust,” Alphabet Chief Executive Sundar Pichai told analysts on Tuesday.
Alphabet Chief Financial Officer Ruth Porat still warned that she anticipated “the second quarter will be a difficult one” because the early April trends may not hold.
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