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Alphabet Shows More Growth than Expected, Whereas ad Business say the Contradictory

Alphabet shows more growth than expected, whereas ad business say the contradictory

The parent company of Google, today, reported its outcome for the Q1 2020 performance, and the Company came out with a $41.16 billion revenue today for the first three month period. The numbers turned out to be more than expected as according to various business analysis and analysts, the figure should have been around $40.33 billion. But that is not all. The Company may have generated more revenue than expected, but the earnings per share came out to be under expectation.

The street estimated the earnings per share to be around $10.38, whereas the Alphabet Company was able to deliver a very slim figure, which was around $9.87 earnings per share. The shares of Alphabet, although in the after-hours trading, rose to 2.8% after it shed 3.3% in regular trading. 

There were reports generated from inside Alphabet, which provided us with a warning of sorts about the decline. The CFO of Alphabet Ruth Porat did mention that there will be a notable decline in the latter quarter of the business. He stated that the “performance was strong during the first two months of the quarter,” but now, in the month of “March, Alphabet experienced a significant slowdown in ad revenues.”

The revenue and profit of Alphabet are generated in bulk by Google, which, on the other hand, is immensely generated by their advertising incomes. The Company largely generates its revenue from advertisements through YouTube and its search engine. Therefore the total revenue generated by its network comes around 82% within the first three months of the year itself.

Alphabet has various other small scale skunkworks projects that are also known as ‘Other Bets’. The revenue generated by Alphabet’s ‘Other Bets’ for the Q1 2020 is only around $135 million which compared to the revenue generated a year ago is a very slim figure. The revenue for ‘Other Bets’ in the Q1 2019 was around $170 million. And these figures are enough to tell us how the revenue for the Company has declined massively. 

Because of the revenue decline in Other Bets, the Company saw an operating loss from the meager figure of $868 million to a whopping $1.12 billion. 

The Company surely has seen a massive fall in its business in March due to the ongoing pandemic coronavirus. The Alphabet Company has received mixed results, and because of that, it might be too early for investors to be worried about more economic deterioration in the Company. Most advertising companies are facing hurdles in maintaining the balance between the consumer and business expenditure. The pandemic has surely torched many companies, and it may take a while for these advertising companies to find their place back in the economy.

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