Alphabet Inc on Tuesday gave a better than expected estimate for quarterly revenue as its Google unit posted double-digit advertising growth despite the economic slowdown from the novel coronavirus.
Rising internet usage have driven Google to record revenues in the last few years. But the pandemic seems to have a negative impact to consumer spending.
“Given the depth of the challenges so many are facing, it’s a huge privilege to be able to help at this time,” said Sundar Pichai, Chief Executive Officer of Alphabet and Google. “People are relying on Google’s services more than ever and we’ve marshalled our resources and product development in this urgent moment.”
“Our business,led by Search, YouTube, and Cloud, drove Alphabet revenues to$41.2 billion, up 13% versus last year, or 15% on a constant currency basis,” said Ruth Porat, Chief Financial Officer of Alphabet and Google. “Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues. We are sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities.”
Porat told analysts on Tuesday that while users were searching more, they were looking up less commercial topics and advertisers were cutting spending.
“As of today, we anticipate the second quarter will be a difficult one for our advertising business,” Porat said.
Porat said search ad revenue had declined by a “mid-teens percentage” by the end of March compared with a year earlier.
Alphabet’s overall revenue in the first quarter was $41.2 billion, up 13% compared with the same period last year.
Sales came in at $33.71 billion, up 14% from a year ago. YouTube revenue jumped 33.5%, while Google Cloud’s top line soared 52%.
Google’s ads business generated about 83% of Alphabet’s revenue last year. Google ad sales were $33.8 billion, up about 10% from last year’s first quarter.
About 5.5% of Alphabet’s revenue last year came from cloud services for which Google charges businesses, schools and governments. The cloud business generated $2.8 billion in revenue, up 52% from a year ago. YouTube revenue jumped 33.5%.
Alphabet’s total costs and expenses rose about 12% from a year ago to $33.2 billion.
Alphabet’s first-quarter profit was $6.8 billion, or $9.87 per share.