The earnings report from Google’s parent Alphabet allayed fears the pandemic could devastate the digital advertising revenue that is the internet company’s revenue engine.
SAN FRANCISCO – Google’s parent company Alphabet on Tuesday announced an increase in profits and revenues in the first quarter, even as a coronavirus-induced economic crisis hit the ad in March.
Alphabet shares jumped 3% in after-hours trading after the release of earnings figures that allayed fears the pandemic could devastate the digital ad revenue that drives the internet company’s revenue.
Alphabet reported profit of $ 6.8 billion, up nearly 3% from a year ago, on revenues that rose 13% to $ 41 billion from the same quarter of the year. last year.
The internet colossus, however, said the impact of the pandemic began to hit online advertising, its main source of revenue and profit, in the last month of the period.
“Performance has been strong in the first two months of the quarter, but in March we saw a significant slowdown in advertising revenue,” said CFO Ruth Porat.
“We are focusing more on more efficient execution, while continuing to invest in our long-term opportunities. “
According to Porat, the revenue over the three months was generated through research, cloud computing offerings, and ads on the YouTube video platform.
– Advertising revenues up –
Google’s overall advertising revenue rose 10% for the quarter despite the pandemic worsening in March.
“This is probably exactly what the technology needed at a time when many suspected FANG / Techs could switch,” Newton Advisors’ Mark Newton said in a tweet, referring to the acronym for big tech companies Facebook, Amazon. , Netflix and Google.
YouTube’s advertising revenue rose by about a third to $ 4 billion as people turned to online entertainment as they took refuge at home to avoid the coronavirus.
The pandemic has disrupted the operations of technology powerhouses known to disrupt traditional business models.
Fewer people are buying new smartphones; more and more people are online using social platforms, but online advertising is collapsing; the need for cloud computing is increasing; and more and more consumers rely on the delivery of essential goods from Amazon.
Along with other tech companies, Google has highlighted its role in helping consumers and authorities in the battle against COVID-19.
Managing Director Sundar Pichai said that “we have mobilized our resources” to help people during the crisis.
“Considering the depth of the challenges that so many people face, it is a huge privilege to be able to help at this time,” he said.
Google has partnered with longtime rival Apple to develop ‘contact tracing’ technology on coronavirus smartphones by allowing devices on both platforms to communicate and indicate when people have crossed paths. ‘an infected person.
Earlier Tuesday, YouTube said it had started adding fact-checking panels to search results in the United States for videos of topical allegations that turned out to be false.