Alphabet jumps over 7% on stronger than expected revenue in the first quarter

Alphabet Inc. (NASDAQ: GOOGL) released its quarterly financial results on Tuesday. The stock was reported more than 7% up in after-hours trading as the company said that the Coronavirus driven decline in ad revenues last month is slowly starting to recover.

The U.S tech giant generated £3.24 billion in advertising revenue from YouTube in the recent quarter that translated to a 33% growth as compared to the same quarter last year. According to CFO Ruth Porat, however, brand advertising on YouTube noted a sharp decline in March. Alphabet’s cloud revenue came in at £2.23 billion in the first quarter.

Alphabet’s Q1 financial results versus analysts’ estimates

According to Refinitiv, analysts had expected Alphabet to print £32.33 billion in revenue in the first quarter. Their estimate for earnings per share (EPS) was capped at £8.29. In its financial report on Tuesday, however, Alphabet boasted a higher revenue of £33.03 billion in the recent quarter but fell short of the earnings estimate posting £7.92 per share (adjusted) in Q1. In terms of traffic acquisition costs, experts had forecast £6.03 billion in the first quarter versus a lower £5.98 billion that Google’s parent company recorded in its earnings report on Tuesday.

At £27.09 billion, Google’s net advertising revenues were recorded higher than £24.55 billion in the comparable quarter last year. The company also reported its “other revenue” at £3.56 billion in Q1 versus the year-ago figure of £2.90 billion. This segment includes Google’s cloud products, Pixel phones, and other hardware offerings.

Alphabet’s revenue from “Other Bets” declines in Q1

Alphabet also generated additional revenue of £108.32 million from “Other Bets”. In Q1 last year, the revenue from this segment that includes Alphabet’s Verily (life sciences company) and Waymo (autonomous cars business) was printed at a higher £136.41 million. Operating loss attributed to “Other Bets” came in at £900 million in the first quarter.

According to CFO Porat, Alphabet will slash its capital expenditures modestly in 2020. The company had originally planned a 20% growth in its headcount this year but is now likely to decelerate in Q4. The California-headquartered technology company recently announced a hiring freeze on multiple parts of the company and slashed its marketing budget by 50%.

Alphabet Inc., however, did not announce any change in its share repurchase programme.

At £1,068 per share, the £681 billion company is currently less than 3% down year to date in the stock market.