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Stock for Google's parent company, Alphabet, was up nearly 4% in after-hours trading Tuesday after the company reported that it beat Wall Street expectations for total revenue.
Yes, but: Despite beating expectations on revenue, the company still reported a slowed advertising growth rate compared to last quarter, due to the decline of the ad market caused by the coronavirus. Google makes the vast majority of its total revenue from ads.
Why it matters: Investors were eager to see how well Google would fare this quarter, given that it's by far the largest advertising-based company in the world.
- Google's results signal some relief to investors in the ad-based tech sector, although analysts still predict a very rocky road ahead for advertising-based companies.
By the numbers, via CNBC:
- Earnings: $9.87 per share, adjusted versus $10.33 per share expected
- Revenue: $41.16 billion verses $40.29 billion expected by Refinitiv
- Traffic acquisition costs: $7.45 billion versus $7.51 billion per FactSet estimate
- Cloud revenue: $2.78 billion
- YouTube advertising revenue: $4.04 billion
Be smart: First quarter revenues don't reflect a full quarter of economic impact from the virus crisis. Many of these companies didn't begin to experience major ad pullback until March, when stay-in-place orders began.
- Google in particular has been hit heavily by the reduction in ad spending by travel companies like Expedia and Booking Holdings (owner of booking.com and kayak.com).