Alphabet feels COVID-19 pinch on revenue, records first-ever decrease

31st July 2020

The Google parent and ad-giant recorded an 8.1% fall from the second quarter of 2020.

Amassing $29.9 billion (R509.9 billion) in ad sales for the second quarter, the lowest Alphabet Inc. has been since the third quarter of 2018, and it's first-ever decline in revenue.

Chief Financial Officer Ruth Porat noted, however, that the ad sales were beginning to pick up towards the end of the second quarter, and YouTube and Google's cloud business remained relatively unaffected by the pandemic.

"We are cautiously encouraged by our results but, it’s premature to say that we’re out of the woods," said Porat.

Google was already experiencing a drop in ad sales well before the pandemic as investors funneled more funds into Alphabet's smaller but faster-growing units like Youtube, which grew 6% to $3.8 billion (R64.6 billion).

Overall the California-based company experienced a 2% fall in revenue.

Porat said that the increase in cloud revenue was primarily driven by people needing to work from home.

This trend was seen by Rival Amazon's cloud unit which grew 29% to $10.8 billion (R183.4 billion) in the same quarter.

This may change as many countries head towards recessions all over the world, making companies less likely to spend on new software and infrastructure.

Google also said that spending and hiring would continue for their cloud business, which took on about 4 000 new employees during Q2, a similar figure to the one they reported in Q2 2019.

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