Google ad rebound offsets Alphabet's first-ever sales drop - Reuters

Google ad rebound offsets Alphabet's first-ever sales drop - Reuters

Google ad rebound offsets Alphabet's first-ever sales drop - Reuters

Posted: 30 Jul 2020 01:22 PM PDT

OAKLAND, Calif./BENGALURU (Reuters) - Google's ad sales have recovered since plummeting in March during the coronavirus pandemic, parent Alphabet Inc (GOOGL.O) said on Thursday, easing concerns about its first quarterly sales slide in its 16 years as a public company.

Alphabet shares were barely changed at $1,552, above their pre-pandemic high, after it said revenue fell 2% in the second quarter, less than analysts' estimate of a 4% decline.

Alphabet, whose ad sales account for about 78% of its revenue, has struggled during past economic slowdowns, as marketing is often the first budget item to get slashed.

But Google and its online advertising rivals Facebook Inc (FB.O) and Inc (AMZN.O) on Thursday all reported better results in the pandemic than in past recessions.

With its mostly free tools for web browsing, video watching and teleconferencing, Google has become a larger part of many consumers' lives as lockdown orders force people to rely on the internet for work and entertainment. In turn, the internet has become more attractive to advertisers than TV, radio and other avenues.

"We saw the early signs of stabilization as users returned to commercial activity online," Alphabet Chief Executive Sundar Pichai told analysts during a conference call on Thursday.

Search ad sales at the end of June were about flat with a year ago, marking an improvement from a "mid-teens" percentage decline in March, Alphabet Chief Financial Officer Ruth Porat told the analysts.

YouTube ad sales rose 6% in the second quarter, and were growing even faster by late June, Porat said. Sales of ads on partner properties fell 10% but were "improving somewhat toward the end of the quarter as advertisers' spend began to return," she added.

Overall second-quarter revenue was $38.3 billion, with the slowest growth since a 2.9% increase during the Great Recession in 2009.

Alphabet announced a $28 billion boost to its share buyback program. It said it would still hire a big class of recent graduates even as it slashes spending on real estate and other activities.

"What we're looking at is really how to reimagine what the workplace will look like," Porat said.

Total costs and expenses rose about 7% from a year ago to $31.9 billion in the second quarter, compared with a 12% jump a quarter ago.

Capital expenditures fell 12% to $5.4 billion, compared with a 3% drop last quarter.

Alphabet's profit was nearly $7 billion, or $10.13 per share, above analysts' average estimate of $5.6 billion, or $8.29 per share, for the quarter.

About 66% of its revenue came from Google search and YouTube ads, 12% from ads sold on partner properties online, 8% from its cloud business, and 14% from its mobile app store and about a dozen other smaller businesses.

After the company announced it would extend its coronavirus work-from-home order until summer 2021, a Google sign is shown at one of the company's office complexes in Irvine, California, U.S., July 27, 2020. REUTERS/Mike Blake

But the company faces challenges across all those fronts. New data privacy laws, including one that went into effect this month in Google's home state of California, are depressing ad prices.

Antitrust regulators across the Americas, Europe and Asia are weighing whether Google has stifled competition on its way to dominating search, mobile software and other businesses, with some bodies even considering forcing it divest parts of its operations.

About 2,000 employees last month petitioned Google's emerging cloud business to scuttle deals with some police agencies, citing racial discrimination concerns. And whether a massive hiring spree will win other cloud clients is uncertain. Cloud sales in the second quarter of about $3 billion were in line with analysts' estimates.

Reporting by Paresh Dave in Oakland, Calif. and Munsif Vengattil in Bengaluru; Editing by Shailesh Kuber and Richard Chang

Apple, Amazon, Google and Facebook Earnings Calls: What Stood Out in Each - TheStreet

Posted: 31 Jul 2020 12:30 PM PDT

Apple attracted a lot of first-time iPad and Mac buyers last quarter, while Amazon dialed up its warehouse and logistics investments.

Microsoft's slowdown in search advertising could spell tough news ahead for Google - CNBC

Posted: 23 Jul 2020 11:52 AM PDT

Alphabet CEO Sundar Pichai gestures during a session at the World Economic Forum (WEF) annual meeting in Davos, on January 22, 2020.

(Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)

Microsoft's advertising business struggled last quarter, as advertisers cut their budgets during the coronavirus pandemic and corresponding spike in U.S. unemployment.

That outcome could spell bad news for search advertising rival Google, whose parent company Alphabet reports second quarter earnings next week.

On Wednesday, Microsoft said that search revenue minus traffic acquisition costs fell 18% from the year-ago quarter as customers spent less on ads.

One quarter ago, that part of Microsoft's business was up 1% year-over-year, while Google search ad revenue declined 9.4%. Google's search engine is more widely used than Microsoft's Bing; Google had about 84% market share in June, while Bing had 6%, according to NetMarketShare.

Microsoft as a whole saw slower growth as the coronavirus affected many parts of its business last quarter, but portions of its business like gaming, cloud infrastructure and productivity software helped smooth out the results as people remained at home around the world to reduce spread of the coronavirus. Alphabet is less diversified than Microsoft, with 84% of its revenue coming from Google advertising in the first quarter.

Analysts polled by Refinitiv currently expect $37.35 billion in second-quarter revenue from Alphabet, suggesting a 4% year-over-year decline. A Google spokesperson did not immediately respond to a request for comment. 

Amy Hood, Microsoft's chief financial officer, said Wednesday that the company expects search revenue for the current quarter, excluding traffic acquisition costs, to be down "in the low 20% range." (Microsoft's fiscal year ended June 30.)

Amid a broad sell-off in tech stocks on Thursday, Alphabet Class A shares were down as much as 3.5% and Microsoft stock traded as much as 4.4% lower.

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