Google sales decline amid pandemic, but still beat estimates


Google headquarters in Mountain View, California. 

Stephen Shankland/CNET

The coronavirus pandemic took a toll on Google, bringing the company’s sales down year over year for the first time in its history. Still, the company beat estimates from Wall Street analysts.

As economies around the world began to shut down last quarter to combat the spread of COVID-19, Google’s business took a hit. The slide came as advertisers — Google makes most of its money on ads — decided to pull back as people hunkered down in their homes. 

Google’s parent company Alphabet did better than expected during the first three months of the year, but warned of a sharp drop-off for the second quarter. The search giant announced those results Thursday, giving investors and the public a glimpse of the full business impact of the pandemic.

During the quarter ended June 30, Alphabet company tallied $38.2 billion in sales, beating analyst estimates of $37.37 billion. Earnings per share were $10.13, beating of expectations of $8.21 per share, according to Refinitiv. Analysts had taken the expected slump into account, estimating lower numbers year over year — a rare occurrence for a company as valuable as Alphabet. 

“As people increasingly turn to online services, our platforms — from Cloud to Google Play to YouTube — are helping our partners provide important services and support their businesses,” CEO Sundar Pichai said in a statement.

Google financial performance was “driven by gradual improvement” in the company’s ad business, CFO Ruth Porat added in a statement. Google also announced a $28 billion stock repurchase.

The second-quarter earnings report comes a day after Pichai faced Congress at a historic antitrust hearing, where he was joined by the CEOs of Facebook, Amazon and Apple. During the grilling, Pichai defended Google against criticism over the company’s massive digital ad business, which generates the majority of the company’s more than $160 billion in sales each year. Critics are accusing Google of anticompetitive behavior with its ad business because the company owns all sides of the auction system, which could give Google an unfair edge. This year, Google will get 29.4% of all ad dollars spent online in the US, predicts eMarketer. Facebook will be No. 2 in digital ad sales, with 23.4 percent.

At the hearing, Pichai claimed competition in the market for online ads has helped lower online advertising costs by 40% over the last 10 years. “Google’s continued success is not guaranteed,” he said. “New competitors emerge every day, and today users have more access to information than ever before.”

Google this week also made big decisions about its work force of roughly 200,000 people. Pichai on Monday announced the company would let its employees work from home until at least July 2021. He reportedly made the decision in part because of the uncertainty around schools reopening. Pichai also said he wanted to give the employees the flexibility to plan ahead, as well as sign full-year leases in other places if they wanted. 

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