GOOG Q1 2020 Earnings

Call Details

• Call Title: Alphabet Inc. Q1 2020 Earnings Call
• Date: April 28, 2020 at 6:30 PM UTC
• Management Team:
  • Sundar Pichai (CEO, Alphabet and Google)
  • Ruth Porat (Chief Financial Officer)
  • Jim Friedland (Senior Director of Investor Relations)

Call Summary

Financial Performance

• Consolidated revenues were $41.2B, up 13% year-on-year and up 15% in constant currency.
• Google segment revenues were $41.0B, up 14% year-on-year.
• Google Search and other advertising revenues were $24.5B, up 9% year-on-year, with March ending at a mid-teens percentage decline year-on-year.
• YouTube advertising revenues were $4.0B, up 33% year-on-year, with growth decelerating to high single digits by the end of March.
• Google Cloud revenues were $2.8B, up 52% year-on-year, driven by GCP infrastructure and data/analytics offerings.
• Other revenues were $4.4B, up 23% year-on-year, driven by YouTube non-advertising and Play growth.
• Total traffic acquisition costs were $7.5B, representing 22% of total advertising revenues and up 9% year-on-year.
• Consolidated operating income was $8.0B (operating margin 19%), net income was $6.8B, and diluted EPS was $9.87.

Guidance

• Alphabet anticipates the second quarter will be a difficult quarter for the advertising business given COVID-19 uncertainty.
• The company now expects a modest decrease in total 2020 CapEx versus 2019, reversing the earlier expectation of an increase.
• Technical infrastructure investment is expected to be roughly flat versus 2019, with relatively more spend on servers and less on data center construction.
• Alphabet is slowing the pace of hiring for the remainder of 2020 while continuing to hire in priority areas.
• Headcount growth is expected to decelerate starting in Q3 and continue into Q4 compared with prior expectations.
• Global office facility investments will be reduced due to paused construction and slower office acquisitions.