Google has suffered its first recorded revenue decline, as the coronavirus crisis caused an 8 per cent slide in advertising income in the latest quarter and depressed parent company Alphabet’s revenues by 2 per cent from the year before.
Ruth Porat, chief financial officer, said the figures reflected “gradual improvement in our ads business,” as well as “strong growth in Google Cloud and other revenues”.
Alphabet’s cloud business posted a 43 per cent jump in revenue, to $3bn. Though the performance echoed the gains reported by other cloud computing companies during the pandemic, the growth was still lower than the 52 per cent of the preceding three months, and below most expectations. Advertising on YouTube climbed 6 per cent, to $3.8bn.
The company’s executives said three months ago that Google had started the second quarter with advertising revenue suffering a “mid teen year on year decline”. But they also surprised investors at the time with the news that they were seeing the first signs of stabilisation in search advertising.
Since then, Alphabet’s shares have risen by 25 per cent, nearly double the rise in the broader US stock market. After the results news, the price vacillated.
Big tech’s big earnings day
Alphabet — which counts on Google for more than 99 per cent of its revenue — reported gross revenue in the latest period of $38.3bn. Net revenue, after deducting traffic acquisition costs, fell by less than a percentage point, to $31.6bn.
Earnings per share declined by 29 per cent, to $10.13, as costs rose by 7 per cent, despite a company-wide moratorium on all but essential hiring.
Most analysts had expected Alphabet’s net revenue to fall 4 per cent to $30.5bn in the latest quarter, with earnings per share dropping to $8.34. They had also forecast a return to growth in the third quarter, with revenues expected to rebound nearly 3 per cent and earnings per share up 6 per cent.