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Google parent reveals COVID-19 ad hit but revenue still surges to $41bn

Google’s parent company has revealed a 13% surge in first quarter revenue despite a “significant” hit to advertising sales as the coronavirus crisis gathered pace.

Alphabet – the first of the five big US tech firms to report on their progress during the pandemic – recorded revenue of $41.2bn between January and March.

Shares – 8% down in the year to date amid the stock market chaos since March – rose more than 3% in after-hours dealing on Wall Street when Alphabet’s figures dropped.

Google CEO Sundar Pichai speaks during a conference in Brussels
Image: Google CEO Sundar Pichai told investors people were relying on the group’s services more than ever during the lockdown

Analysts suggested the revenue figure had settled some nerves over an uncertain picture for the big five – also including Amazon, Microsoft, Apple and Facebook – as companies and consumers alike cut back on their spending in reaction to the COVID-19 crisis.

Lockdown conditions across key markets in Europe and North America meant there was little incentive to advertise in areas such as travel and leisure.

The 13% revenue growth figure represented the weakest rise in first quarter sales for five years.

Google ad sales were $33.8bn – a rise of 10% on the same period last year.

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Advertising, mainly via Google, remains the most important constituent of Alphabet’s earnings as it accounts for around 80% of revenue on an annual basis.

Chief financial officer Ruth Porat told investors: “Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues.”

BERLIN, GERMANY - OCTOBER 05: A man walks past a billboard advertisement for YouTube on October 5, 2018 in Berlin, Germany. YouTube has established itself as the biggest global platform for online video presentations. (Photo by Sean Gallup/Getty Images)
Image: YouTube ad sales were up by more than 30%

The cloud business generated $2.8bn in revenue, up 52%, while YouTube ad sales topped $4bn – a third up on a year ago.

The company, which does not give guidance on its future earnings’ expectations, has already implemented a series of cost-cutting measures including slowing down the pace of hiring and marketing.

Alphabet’s total costs and expenses rose about 12% in the first quarter from a year ago – topping $33bn.

Ms Porat added: “We are sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities.”

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