Google Cloud progresses advertising revenues drop

Google

Google Cloud Revenue Profile Margin annual Report 2020.

Google Cloud’s activity was positive in an otherwise mixed quarter for Alphabet, while Search and Youtube’s advertising revenue plummeted at the start of the coronavirus pandemic. For the first quarter of 2020, Google Cloud – which includes Google Cloud Platform and G Suite – reported $2.77 billion, compared to $1.825 billion the previous year and $2.614 billion the previous quarter.

If advertising continues to generate the most revenue for Google, this figure is down significantly compared to the last quarter. In the first quarter, Google’s advertising revenues were $33.76 billion, compared to $37.934 billion in the fourth quarter of 2019.

The same is true for Google Search and other advertising revenues (excluding Youtube), which generated $24.502 billion in the first quarter, compared to $27.185 billion in the fourth quarter. Revenues from Youtube ads increased from $4.717 billion in the previous quarter to $4.038 billion.

Decrease in advertising revenues.

“Performance was strong for the first two months of the quarter, but then, in March, we experienced a significant slowdown in advertising revenues,” says Ruth Porat, Chief Financial Officer of Alphabet and Google. We are focusing more on more effective enforcement, while continuing to invest in our long-term opportunities.”

Despite the sharp drop in ad sales.

eMarketer senior analyst Nicole Perrin noted that any long-term impact on Google’s search activities will likely not be serious: “The deceleration of Google’s Display advertising activities, including Google Display Network and Youtube, has been weaker, and has again been consistent with our relatively optimistic first quarter digital advertising scenarios. This suggests a cautiously optimistic outlook for the second quarter – although growth will be worse than the first quarter as a whole, as the impacts of the first quarter were limited at the end of the quarter.”

Google cloud growth rate.

As for Alphabet’s overall results for the first quarter, diluted earnings per share amounted to $9.87 on revenues of $41.2 billion, an increase of 13% year-over-year. On average, Wall Street expected a profit per share of $10.38 for the first quarter, with sales of $40.33 billion.

In the "Other bets" category of Alphabet, revenues were reduced to $135 million, while operating loss reached $1.1 billion.

Sundar Pichai, Google’s PDF, announced that the company will slow down hiring for the rest of 2020.