Google sales

Google sales drop amid pandemic, but still exceed estimates

Google announced its results a day after a landmark antitrust hearing.


The coronavirus pandemic has taken its toll on Google, pushing down the company’s year-over-year sales for the first time in its history. Still, the search giant has beaten estimates from Wall Street analysts.

As economies around the world began to shut down in the last quarter as governments and businesses sought to tackle the spread of COVID-19, Google’s business has been hit. The slide came as advertisers – Google makes most of its money on ads – decided to step back while people crouched in their homes.

Google’s parent company Alphabet did better than expected in the first three months of the year, but warned of a sharp drop for the second quarter. He announced the results on Thursday, giving investors and the public a glimpse of the full business impact of the pandemic.

In the quarter ended June 30, Alphabet reported sales of $ 38.2 billion, beating analysts’ estimates of $ 37.37 billion. Earnings per share were $ 10.13, beating expectations of $ 8.21 per share, according to Refinitiv. Analysts had factored in the expected drop, estimating lower year-over-year numbers – a rare occurrence for a company as valuable as Alphabet.

Google sales fell 2% from the same period last year, but the company said YouTube revenue and Google’s cloud business gains helped soften the blow.

“Like other companies, this quarter we saw the first signs of stabilization as users resume online business activities,” CEO Sundar Pichai said on a conference call with analysts. “Of course, the economic climate remains fragile.”

CFO Ruth Porat said the company’s advertising activities had “gradually improved” since the start of the pandemic, but also warned investors that the company could still face problems. “It is premature to say that we have come out of the woods,” she said on the call.

Google also announced a $ 28 billion share buyback.

The second quarter earnings report comes a day after Pichai faced a Congressional subcommittee for a historic antitrust hearing, where he was joined by the CEOs of Facebook, Amazon and Apple. Over the grill, Pichai defended Google against criticism of the company’s massive digital advertising activity, which generates the majority of its more than $ 160 billion in sales each year.

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Critics accuse Google of anti-competitive behavior with its advertising business because the company owns all aspects of the auction system, which could give it an unfair advantage. This year, Google will get 29.4% of all advertising dollars spent online in the United States, predicts eMarketer. Facebook will be # 2 in digital ad sales, with 23.4%.

At the hearing, Pichai argued that competition in the online advertising market has helped reduce online advertising costs by 40% over the past 10 years. “Google’s continued success is not guaranteed,” he said. “New competitors are appearing every day, and today users have more access to information than ever before.”

On the call, Pichai did not acknowledge the hearing except to say, “It has certainly been a busy week and I am happy to be here.” Despite the audience drama, the four tech giants, who all announced their results on Thursday, posted big numbers.

This week, Google also made some big decisions about its workforce of around 200,000 people. Pichai announced Monday that the company will let its employees work from home until at least July 2021. He is said to have made this decision in part because of the uncertainty surrounding the reopening of schools. Pichai also said he wanted to give employees the ability to plan ahead, as well as sign full-year leases in other locations if they so choose.

Porat admitted on Thursday that the changes could impact the company’s culture. “We believe in collaboration. Chance is the key to innovation,” she said. “What we’re looking for is really how to reimagine what the workplace will be like.”

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