Alphabet beat Wall Street expectations for second quarter earnings

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• Alphabet has announced its second-quarter earnings for 2020, slightly exceeding Wall Street expectations.
• But it was not enough to save the company from its first drop in revenue.
• Cloud was one of the brightest places for Google, with a 43% year-over-year increase.
• Despite the drop, the company’s shares held steady after hours.
• Visit the Business Insider home page for more stories.

Google’s second-quarter results are on the way, revealing a slight bump in Wall Street expectations, although it was not enough to save the company from its first decline in revenue since it went public.

Parent company Alphabet reported revenue of $ 31.6 billion (less traffic acquisition costs) with earnings per share of $ 10.13. That’s less than the $ 31.7 billion reported in the second quarter of 2019, but a smaller drop than Wall Street had predicted as the coronavirus crisis wreaks havoc on the advertising industry. One of the top offenders was Google’s top search and ad revenue, which decreased 9.8% year-over-year.

Despite the notable decline, the company’s shares held steady after its earnings call, rising less than 1%.

While CFO Ruth Porat said during the company’s earnings call that she was “cautiously encouraged” by growth near the end of the quarter, she acknowledged that it was still an uncertain and “difficult global economic environment.”

YouTube’s advertising revenue also exceeded expectations, bringing in $ 3.81 billion for the quarter, but with just 6% year-over-year growth, it also marked a slowdown as the pandemic hit ad spending.

Meanwhile, Cloud, an expected “bright spot” for Google, raised $ 3.01 billion, compared to $ 2.7 billion for the same quarter last year and marked a year-on-year boost of 43.19%. While hiring has slowed across the board, executives said in the company’s call that it was still “aggressively hiring in priority areas like Cloud.”

Google’s “other” revenue, which covers things like Google Play hardware and purchases, was $ 5.12 billion for the quarter, an increase of 25.6% year-over-year.

As for Alphabet’s “other bets” such as Waymo and Verily, the company reported revenue of $ 148 million, a year-over-year decrease of about 8%.

It was also announced that the Alphabet board authorized the company to repurchase up to $ 28 billion of its Class C shares.

Here are the results compared to the Bloomberg estimates.

Revenue: $ 31.6 billion (less traffic acquisition costs) ($ 30.5 billion estimated)

EPS (GAAP): $ 10.13 (Estimated $ 8.27)

Net income: $ 6.96 billion

Google Cloud revenue: $ 3.01 billion

YouTube advertising revenue: $ 3.81 billion