Alphabet (GOOGL) Earnings Mixed Revenues Beat Estimates, But Ad Sales Drop

Alphabet announced its Q1 earnings report yesterday after the markets close, reflecting how the coronavirus outbreak is affecting the company. The quarter started strong, but quickly the situation deteriorated amid the coronavirus outbreak impact. What we have learned from the current crisis is that Google is now better diversified with cloud services.

Alphabet GOOGL reported earnings of $6.84 billion, or $9.87 per share, compared with $6.66 billion, or $9.50 a share, in Q1 2019. I have mentioned in Alphabet (GOOGL) Q1 Earnings Expectations that the market consensus was at $11.16 per share.
Revenue without traffic-acquisition costs came up to $33.7 billion from $29.48 billion in the year-ago period. The analyst’s expectations were for $33.3 billion.

Cloud revenue came 34% higher to $2.77 billion. The Cloud computing revenue growth outperformed amid increasing demand from companies that shifted to work-from-home mode. The gross revenue rose 13% to $41.159 billion, slower than the 17% growth in 2019 Q1, but above market consensus of $40.98 billion.
Google Properties which includes ad and services revenue from Gmail, internet search, Google Play and YouTube revenue rose 11.6% to $28.54 billion, below the revised estimates of $29.07 billion.

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Alphabet Non-Advertising Business Strong

 Alphabet non-advertising business remained strong throughout the quarter. The YouTube sales increased 33%, to $4.038 billion from $3.03 billion in Q1 2019, while Google Cloud sales grew 52%, to $2.78 billion from $1.83 billion. 

Google’s “other” revenues, which includes hardware and Google Play sales, came up to $4.44 billion a 23% increase since the previous year.  

The company didn’t give any guidance about the Q2. I expect Alphabet June quarter to be impacted much more by the global coronavirus lockdown amid steep declines in transportation and entertainment ads. We might see slow hiring and marketing and capital expenditures in the second quarter. 

Alphabet (GOOGL) price ended sharply higher on Tuesday at $1,232.59 down 3.01%. The stock price closed below the 50-day moving average, but as of writing and during the premarket trading, the Google price is 7.74% higher at $1,328.  



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