Alphabet Beats Earnings Expectations, Driven By Gradual Improvements In Its Ad Business

Google’s parent company Alphabet beat expectations for its second-quarter 2020 earnings, coming in with revenue at $38.30 billion for the three months ending June 30, driven by gradual improvement in its advertising business and strong growth in Google Cloud and Other Revenues.

The company beat revenue expectations by $950 million. “We’re working to help people, businesses and communities in these uncertain times,” stated Sundar Pichai, CEO, Alphabet and Google. “As people increasingly turn to online services, our platforms — from Cloud to Google Play to YouTube — are helping our partners provide important services and support their businesses.”

Despite meeting expectations, advertising fell in the quarter compared with a year ago. Google Search and other fell from $23.6 billion in second-quarter 2019 to $21.3 billion in second-quarter 2020. Google advertising came in at $32.4 billion in second-quarter 2019 vs. $29.8 billion in Q2 2020.  

YouTube ad revenue rose from $3.6 billion in Q2 2019, rising to $3.81 billion in second-quarter 2020.

Cloud services also rose from $2.1 billion in the second quarter of 2019 to $3 billion in the second-quarter 2020.

Google ad revenue fell in the quarter, but all three parts of Google's ad business outperformed our expectations for Q2, including a substantial beat for search revenues, down 10%, compared with the firm's expectations of a 17% decline, according to eMarketer. 

"We expected April to be the bottom of the digital ad market, with a return to growth in May and June, and these results suggest that acceleration was stronger than expected," per eMarketer.

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