Google Revenues Climb, in Encouraging Sign for Big Tech -- Update
April 28 2020 - 5:30PM
Dow Jones News
By Rob Copeland
Google's parent posted a sustained rise in revenue in the first
quarter, suggesting that Silicon Valley might weather the
coronavirus pandemic better than others in the corporate world.
Alphabet Inc., an online-advertising powerhouse, reported total
revenue of $41.2 billion for the first quarter, up 13% compared
with a year earlier. Though the company doesn't provide future
guidance for earnings and frequently diverges from market
expectations, this was a particularly well-timed reveal for a
company that has been a model of growth during its 22 years of
existence.
Analysts polled by FactSet had expected revenue of $40.8
billion. The company's shares gained about 3% in after-hours
trading immediately after the release.
The Google results represent the first public hint of how the
major technology companies are faring in an economy brought low by
the Covid-19 pandemic. The conglomerate's many arms overlap with
rivals like Amazon.com Inc. and Facebook Inc. that have yet to
report earnings.
Snap Inc. reported another tech surprise to the upside last
week, when it posted growth in users and revenue, sending its
shares up more than 30%.
Alphabet's operating profit came in at $8 billion, up from $6.6
billion a year ago. The company makes most of its money from online
advertising in areas like search, where many major customers are
pulling back sharply in industries including travel and retail. The
company's YouTube unit, on the other hand, has an opportunity to
grab eyeballs, and perhaps associated advertising, from homebound
users turning to the video platform in lockdown.
Google's revenue has risen in every quarter of its history.
"People are relying on Google's services more than ever, and
we've marshalled our resources and product development in this
urgent moment," Alphabet Chief Executive Sundar Pichai said in a
statement.
Despite the encouraging results, Google showed potential signs
of a slowdown across the board. Advertising revenue on the
company's traditional properties like search -- its longtime
flagship franchise -- rose 9%, weaker than the historical clip.
YouTube advertising revenue, a small but growing part of the
company, did better, up 33%. "Other Bets," a category that includes
theoretically more-static outlying efforts like self-driving-car
division Waymo, lost more than before.
Questions remain about what comes next. Alphabet's first-quarter
earnings report includes only a few weeks of results during which
lockdown orders first swept the U.S. Some of the company's biggest
advertisers, like travel agencies, entertainment brands and even
Amazon, have said they plan to pull back on marketing more -- even
if the country opens back up soon without major complications.
Morgan Stanley analysts project that online advertising will suffer
more this year than it did in the 2008 financial crisis.
Mr. Pichai, in a call with analysts, said that March represented
"a significant and sudden slowdown in ad revenues."
Write to Rob Copeland at rob.copeland@wsj.com
(END) Dow Jones Newswires
April 28, 2020 17:15 ET (21:15 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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