Alphabet, the holding that owns the world’s dominant search engine Google as well as self-driving technology unit Waymo, Google Cloud Platform and smartphone OS Android among other businesses, yesterday reported forecast-beating revenues and profits. The positive figures were despite a predictable drop in digital advertising sales during March.
Despite March’s dip, income and profit were both well ahead of estimates made by stock market analysts ahead of Alphabet yesterday publishing its actual figures for the quarter to the end of March. The positive set of figures is further evidence that the largest technology companies are proving more robust to the Covid-19 pandemic-induced economic downturn than most other companies.
Alphabet is the world’s largest seller of digital advertising, with Google and YouTube its two biggest revenue generators. The company’s cloud computing business, Google Cloud Platform, is also quickly growing and expected to continue in that vein to become a major revenue source over coming years. There is also hope that driverless unit Waymo, the market leader, will one day become a very profitable business, despite the fact that developing the driverless technology has been a major cash drain in recent years.
Ruth Porat, Alphabet’s chief financial officer, last night praised the group’s performance over the first two months of 2020, while acknowledging “in March we experienced a significant downturn in ad revenues”. That downturn may be far keenly visible in Q2 results to be published in July.
Despite challenging conditions in March as the global economy moved into lockdown, over the quarter Google’s advertising revenues were up to $33.8 billion compared to $30.6 billion over the same three months a year earlier. Across the whole Alphabet group, total revenue was also up to $41.2 billion from $36.3 billion.
Cloud computing revenues leapt to $2.8 billion from $1.9 billion a year ago. Cloud computing is one sector expected to benefit from the changes to society and the economy many analysts anticipate as an outcome of the current pandemic. Google Cloud Platform is the world’s third largest public cloud company after Amazon’s AWS and Microsoft’s Azure.
Investors were buoyed by the fact that income and profits came in ahead of estimates, sending the Alphabet share price up 3% in afterhours trading. However, the share price had slid 3.3% during the session. Overall, Alphabet’s value is down 16.8% from its mid-February high before the coronavirus sell-off started.