Alphabet reports its first-ever decline in revenue in Q2

Alphabet reports its first-ever decline in revenue in Q2
Written by:
Wajeeh Khan
31st July, 11:34
Updated: 31st July, 11:35
  • Alphabet reports its first-ever decline in revenue in the fiscal second quarter.
  • The U.S. firm's board authorises a share buyback of £21.35 billion on Thursday.
  • Alphabet’s revenue from other bets drops to £112.83 million in the second quarter.

Alphabet Inc. (NASDAQ: GOOGL) published its quarterly financial results on Thursday that highlighted the company’s revenue to have plunged for the first time in history. The company attributed the decline to the Coronavirus pandemic that pushed advertisers into slashing spending in the fiscal second quarter.

Shares of the company jumped less than 1% in extended trading on Friday. At £1,178 per share, Alphabet is currently trading more than 10% up year to date in the stock market after recovering from a low of £803.50 per share in late March. Alphabet donated £640 million in March to enhance the response against COVID-19.

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Alphabet’s Q2 financial results versus analysts’ estimates

According to Refinitiv, experts had forecast the company to print £28.49 billion in revenue and £6.26 of earnings per share in the second quarter. Their estimate for advertising revenue from YouTube was capped at £2.88 billion. In its report on Thursday, Alphabet topped all three estimates posting a higher £29.20 billion in revenue and £7.72 of earnings per share. The company said that it generated £2.90 of revenue of YouTube advertising in Q2.

As per the Google parent-company, Google Cloud contributed £2.29 billion to the company’s total revenue in the recent quarter. Its traffic acquisition costs came in at £5.10 billion in Q2. Analysts, on the other hand, had anticipated the company to generate £2.33 billion of revenue from Google Cloud and estimated its traffic acquisition costs at £5.08 billion for the second quarter.

Alphabet’s board also authorised a share buyback of £21.35 billion involving the company’s Class C shares on Thursday.

Alphabet’s revenue from other bets drops to £112.83 million

In the second quarter, Alphabet’s revenue from its “other” category came in at £3.90 billion that was stronger than £3.11 billion in the same quarter last year. Lastly, the company’s revenue from its “other bets” dropped from £123.50 million last year to £112.83 million in the recent quarter. The report also highlighted “other bets” segment to have seen an £850 million of operating loss in Q2.

According to CFO Ruth Porat, Alphabet expanded its workforce by 4,000 employees in the second quarter. It now has a global workforce comprising 127,498 employees. The company said last week that it will spend roughly £7.62 billion in India in the next five years.

Alphabet performed fairly upbeat in the stock market last year with an annual gain of roughly 30%. At the time of writing, the American multinational conglomerate is valued at £800 million and has a price to earnings ratio of 31.44.

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