The pandemic has slowed Alphabet’s growth and advertisers have cut spending.
Alphabet, the parent company of Google, has reported the first drop in revenues in the history of the Holding: the pandemic slowed economic growth, and advertisers cut costs.
In Q2 2020, the company made $38.3 billion in revenue versus $41.1 billion in Q1 2020 and $38.9 billion in Q2 2019.
Key Takeaways from Alphabet’s financial report for Q2 2020
- Net income was $6.959 billion versus $9.947 in the second quarter of 2019;
- YouTube ad revenue reached $3.81 billion (vs $3.603 billion in Q2 2019);
- Cloud business revenue reached $3.01 billion versus $2.1 billion in 2019;
- Google’s non-advertising revenues, including sales of Pixel smartphones and other hardware, equated $5.12 billion. In the second quarter of 2019, this figure reached $4.08 billion.
- Revenues from other areas (self-driving car manufacturer Waymo, medical technology research organization Verily and others) fell from $162 million in Q2 2019 to $148 million.
- Alphabet hired about 4,000 new employees, bringing the number of full-time employees to 127,498.
The company’s board of directors has also approved the buyback of up to $28 billion of Class C shares by the company.
According to Ruth Porat, CFO at Alphabet, by the end of the quarter, consumers had returned to more “commercial” searches and advertisers had begun to increase their spending. However, it is difficult to predict whether this trend will continue, she added.
“We believe it is premature to gauge the durability of recent trends, given the obvious uncertainty of the global macro environment,” Porat said.
Google is also facing antitrust probes along the same lines by the Department of Justice and 50 attorneys general investigating Google company’s search and Android businesses. That is expected to result in legal action that could span issues ranging from its search product to the digital advertising marketplace.