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- Google-parent Alphabet reported first-quarter results on Tuesday that beat revenue expectations but fell below analysts’ earnings hopes.
- Revenue growth in the firm’s key YouTube and Cloud segments buoyed an abrupt slowdown in overall ad spending.Â
- The period “was, in many ways, the tale of two quarters,” CEO Sundar Pichai said, contrasting strong pre-outbreak performance with a drastic decline in sales amid the weakened economic backdrop.
- Watch Alphabet trade live here.
Alphabet announced first-quarter results on Tuesday afternoon that topped revenue estimates and showed growth in key segments amid the coronavirus pandemic.
The Google-parent missed profit expectations for the three-month period as the global economic slowdown tore into performance through March. Investors largely ignored the earnings miss, focusing instead on revenue growth holding up better than expected amid the sharp economic downturn.
The tech giant’s shares soared as much as 8% in early Wednesday trading, pushing its market value roughly $68 billion higher.
Here are the key numbers:
- Revenue: $41.2 billion, versus the $40.3 billion estimate
- Adjusted earnings per share: $9.87, versus the $10.33 estimate
- YouTube ad revenue: $4.04 billion, up 33% year-over-yearÂ
- Cloud revenue: $2.78 billion, up 52% year-over-year
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“Q1 was, in many ways, the tale of two quarters,” CEO Sundar Pichai said in an analyst call transcribed by Sentieo. “Overall, recovery in ad spend will depend on a return to economic activity.”
Usage of the company’s search engine and key apps soared through the quarter as the pandemic forced people indoors, Pichai added. While ad revenues from YouTube and Google Cloud surged from their year-ago results, total sales stagnated as partners cut spending.Â
The firm remains optimistic toward a rebound in ad revenue, Ruth Porat, chief financial officer at Alphabet, said in the call. Alphabet is bracing for a sizable second-quarter hit to sales, she added, but early signs suggest the abrupt decline will wane as the economy begins to recover.
Alphabet shares closed at $1,233.67 on Tuesday, down about 8% year-to-date.
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