Google Earnings Mixed As Coronavirus Hits Digital Advertising - Investor's Business Daily

Google-parent Alphabet (GOOGL) reported mixed first-quarter earnings late Tuesday as the coronavirus emergency slowed digital advertising growth. The Google earnings news sent shares up in extended trading.

Many analysts expect Google's June quarter to be impacted much more by the global coronavirus lockdown.

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Google stock rose 3.7% to near 1,278 in extended trading on the stock market today. In Tuesday's regular session, Google stock fell 3%. Wall Street analysts had lowered estimates heading into the Google earnings report because of the Covid-19 emergency.

Google earnings were $9.87 a share on a Generally Accepted Accounting Principles, or GAAP, basis. That missed analyst profit estimates of $10.73. A year earlier, the internet search giant earned $11.90 a share, excluding a European Union fine.

Google gross revenue rose 13% to $41.159 billion, slowing from 17% growth in the year-earlier period, but topping expectations. Analysts projected gross revenue of $40.98 billion.

Google Properties revenue rose 11.6% to $28.54 billion, below recently lowered estimates of $29.07 billion. That includes ad and services revenue from internet search, Gmail, Google Play and YouTube.

"Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues," Chief Financial Officer Ruth Porat said in a press release.

Google Earnings: Coronavirus Impacts Travel Advertising

The Covid-19 global economic slowdown lowered advertising revenue from travel, auto and retail sectors. While YouTube usage increased amid stay-at-home orders, its advertising demand fell, analysts said.

Still, YouTube revenue rose 33% to $4.038 billion.

Google reported net revenue, minus traffic acquisition costs (TAC), of $33.7 billion. That topped analysts' estimate of $33.2 billion.

TAC rose nearly 9% to $7.45 billion, less than expected, vs. estimates of $7.75 billion. TAC has been rising as Google relies more on partner sites and third-party apps to generate mobile advertising revenue.

Cloud computing revenue growth was a bright spot as online businesses saw more demand and companies shifted to work-from-home mode. Cloud revenue rose 34% to $2.777 billion.

Google doesn't provide formal earnings guidance. Alphabet Chief Executive Sundar Pichai last week said it may slow hiring and marketing investments in the June quarter.

Google stock has a Relative Strength Rating of 78 out of a possible 99. The relative strength line, which compares a stock's price performance with that of the S&P 500, has mostly moved sideways this year.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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Business - Latest - Google News
April 29, 2020 at 04:59AM
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Google Earnings Mixed As Coronavirus Hits Digital Advertising - Investor's Business Daily
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