29 APR 2020

YOUTUBE GENERATED $4.04 BILLION IN AD REVENUE DURING Q1

Alphabet, the parent company of Google and YouTube, topped Wall Street estimates for Q1 revenue but fell short on net profit — and said ad sales had significantly fallen in March amid the coronavirus crisis.

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Ruth Porat, CFO of Alphabet

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YouTube generated $4.04 billion in ad revenue for the first quarter of 2020, up 33% from the year prior. Alphabet, the parent company of Google and YouTube, topped Wall Street estimates for Q1 revenue but fell short on net profit — and said ad sales had significantly fallen in March amid the coronavirus crisis.

Overall, Alphabet reported $41.16 billion in revenue, up 13% year over year, and adjusted net income of $6.84 billion ($9.87 per share). Analysts on average expected the company to post revenue of $40.38 billion and EPS of $10.33, according to Variety.

Alphabet first broke out YouTube revenue in announcing fourth-quarter and full-year 2019 results, along with sales for Google Search and Google Cloud. YouTube generated $15.15 billion in ad revenue last year, up 36%.

On the Q1 revenue beat, shares of Alphabet rose over 8% in after-hours trading Tuesday. Investors have been worried that the Covid-19 crisis could leave a huge dent in the company’s results, with advertising expected to decline given the shutdown of large portions of the world economy.

“Alphabet’s overall performance was strong in January and February, but then in March we experienced a significant slowdown in ad revenues — a year-over-year percentage decline in the mid-teens. We are sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities,”  said Ruth Porat, CFO of Alphabet.

YouTube’s direct-response advertising continued to have “substantial” growth over the entire quarter, while brand advertising began to experience “a headwind” in mid-March, Porat told analysts on the earnings call. By the end of March, total YouTube ads revenue growth had decelerated to a year-over-year growth rate in the high single digits, she said.

Regarding the second quarter, Porat admitted that “it will be a difficult one for the company’s advertising business”. Meanwhile, Alphabet’s ad business should recover once the global economy “normalizes” post-pandemic, but Porat said it was “premature to comment on timing given all the variables here”.

The second quarter will be a difficult one for the company’s advertising business” Ruth Porat CFO of Alphabet