Google’s parent Alphabet Inc. advertised on Thursday despite meeting expectations on the road that upset the company for a second straight quarter.
The company GOOGL,
Its earnings were $ 9.95 billion, or $ 14.21 per share, compared to net income of $ 6.96 billion, or $ 10.13 per share, in the year-ago quarter. Revenue dropped to $ 31.7 billion from $ 31.7 billion after removing traffic-acquisition costs, up from a year earlier.
Analysts polled by FactSet estimated a share of $ 30.66 billion on average TAC revenue of $ 7.95.
Second quarter results, announced after the market closed on Thursday, initially increased 2% of Alphabet’s shares after hours of trading. But the results fell flat after investors saw a $ 2.6 billion drop in ad revenue year-on-year.
“We continue to navigate through a difficult global economic environment,” Alphabet Chief Financial Officer Ruth Porat announced Thursday the results. It saw an improvement in ad sales as the quarter progressed.
“We are all struggling with an epidemic and an uncertain economy,” Alphabet chief executive Sundar Pichai said after a conference call with analysts.
Although $ 29.9 billion of Google’s total quarterly revenue came from $ 38.9 billion in advertising, there were bright spots, reducing its dependence on a struggling market. Sales from Google Cloud and YouTube continued as a growing sign of versatility in the company’s overall product line – YouTube advertising revenue grew 6% to $ 3.8 billion from $ 3.6 billion a year earlier, while Google Cloud sales rose $ 43% to $ 3 billion to $ 2.1 billion.
Google’s soft sales, especially in travel, halted its previous quarterly performance and will likely continue throughout the year. Monus Crispy Hearty analyst Brian White has warned that Google should not only increase competitive pressure from Facebook Inc. FB.
, Amazon, Snap Inc. SNAP,
, And Twitter Inc. TWTR,
But an investigation into the serious distrust surrounding its advertising business.
Read more: Google is being squeezed by the softening advertising market that has cut sales expectations by more than $ 8 billion
Amazon.com Inc. To compete with AMZN
, Google said last week that it would eliminate commission fees for retailers. Pichai told analysts during the call, “In the long run, I have had the opportunity to grow.”
Google is badly impacting one industry in the spring with an epidemic, and if another national lockout occurs, braking for another quarter. The good news is that digital advertising is costing broadcasting and print media.
“The truism is that a huge chunk of advertising goes to gather in the second half of the year with Black Friday, the holiday season, and crowds to spend their budgets,” Julian Baring, US general manager at Digital Media Advertising company Adform told Marketwatch in a phone interview on Thursday. “On the other hand, when the economy declines, advertising spending goes first.”
This makes the second half of 2020 more important for Google, JMP Securities analyst Ron Josie told Marketwatch in a phone interview. He rates Google shares as outperforms, with a price target of $ 1,500. “Google’s new reporting metrics are helpful.”
For a long time, Josie and others have been keeping a close eye on the antitrust investigation of Google’s advertising business in the coming months, and how it could affect operations. On Wednesday, Pichai, Apple Inc. AAPL,
CEO Tim Cook, Amazon.com Inc. AMZN,
CEO Jeff Bezos and Facebook Inc. FB,
CEO Mark Zuckerberg testified before the House on his business practices and market strength.
Read more: Antitrust questions arise but Big Tech CEO does not break in historic hearing
Pichai was particularly grilled at Google’s role as a middleman in the online advertising market, its search result manipulation benefited the company’s bottom line, and alleged that it steals content from developers.
When pressed during a conference call on the regulatory climate, Pichai said he is confident of focusing Google on users and offering them product options at lower prices. “We work by the rules, and if we need to change [business operations to adhere to rules]”We will,” he said.
Alphabet shares rose 15% in 2020. Comprehensive S&P 500 Index SPX,
This year is down 0.%.