The Strategist

Alphabet revenue goes up in Q1 amid COVID-19 pandemic

04/30/2020 - 03:37

Google's parent company - Alphabet Inc. - increased its net profit and revenue due to the high demand for its services in a pandemic in the first quarter of 2020. At the same time, in March, the company's advertising revenue fell by 10%.

Open Grid Scheduler via flickr
Open Grid Scheduler via flickr
The company warned that Q2 will also be difficult for business.

In the reporting period, Alphabet's net income was $ 6.84 billion, or $ 9.87 per share, versus $ 6.66 billion, or $ 9.5 per share, for the same period of the previous year. The indicator for the first quarter of 2019 included one-time expenses for the payment of a fine by the decision of the European Commission in the amount of $ 1.697 billion.

Alphabet's quarterly revenue grew by 13% to $ 41.16 billion.

Experts surveyed by FactSet, on average, forecasted the company's net profit in the first quarter at $ 10.71 per share with revenue of $ 40.8 billion.

"The results for the first two months of the first quarter were strong, but in March we faced a significant reduction in advertising revenue. We intend to focus on improving efficiency, while continuing to invest in long-term opportunities," the company said in a press release.

The firm believes that, given the continuing uncertainty, it is too early to talk about normalization of the situation in the economy.

Google’s revenue in the first quarter grew by 14% to $ 40.98 billion. Advertising revenue increased by 10% to $ 33.76 billion. Traffic acquisition costs increased by 9% to $ 7.45 billion.

YouTube’s advertising revenue jumped 33% to $ 4.04 billion, Google Cloud revenue grew 52% to $ 2.78 billion.

Following the presentation of the report, during a teleconference, Alphabet Financial Director Ruth Porat said that the company will slightly reduce its investments in 2020, as well as slow down the rate of hiring new employees. At the same time, she will continue to implement the share buyback program in accordance with the plans announced earlier.

Alphabet shares rose 7.5% during additional trading on Tuesday. Since the beginning of this year, their value has fallen by 7.7%.