The corona crisis in Google's parent company Alphabet caused the advertising business to shrink in March. The months before went so well that Alphabet closed the first quarter with more sales and profits.
Mountain View (dpa) - The Google mother alphabet is significantly slowed down by the corona crisis and is preparing for tough months. In March, advertising revenues shrank by around 15 percent and the current quarter would be difficult, CFO Ruth Porat warned.
However, supported by a strong start to the year, the internet giant posted increases in sales and profits in the first quarter. CEO Sundar Pichai also wants to do more business with companies that rely on digital change to get out of the crisis. Among other things, Google can score here with its cloud services.
With reserves of around $ 117 billion, Alphabet has a solid buffer to help them get through the crisis well. Nevertheless, savings should be made. This is how the Group steps on the brakes when hiring new employees. In the past quarter, Alphabet's number of employees grew by around a fifth to 123,000.
Alphabet increased quarterly revenue 13 percent year over year to $ 41.2 billion. The video platform Youtube was a growth driver in the first quarter. Your advertising revenue rose to $ 4 billion from $ 3 billion a year earlier. In March, growth was still in the single-digit percentage range, said Porat.
In the Corona crisis, users spend more time on YouTube videos and see more advertising there. On the other hand, high-demand content related to the corona virus crisis was ad-free - and ads are still the Group's most important source of income. However, people relied on Google to find information, Pichai emphasized. Overall, Google’s revenue increased from $ 25.6 billion to $ 28.5 billion.
The Alphabet Group increased its quarterly profit by 2.6 percent to $ 6.84 billion. A year earlier, a competitive penalty by the EU Commission had depressed earnings by $ 1.7 billion.
The other Alphabet businesses - such as Waymo robot trucks, healthcare company Verily, and network specialist Fiber - saw their operating loss grow from $ 870 million to $ 1.12 billion. Together, they had sales of $ 135 million, compared to $ 170 million a year earlier.
Investors celebrated the numbers with an increase of almost eight percent in after-hours trading.