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Internet giant Google reported its first quarter results after the closing bell in New York last night. Keep in mind that this was for the period from 1 January to 31 March 2020. There were some good times (pre-Covid) and bad times (during Covid) in those three months.
Google is a digital business, so it is still doing all the wonderful things that it does for humanity like Search, Gmail, YouTube, Maps, Cloud etc, etc. Its staff are all working from home. Google CEO Sundar Pichai said this last night.
- "Given the depth of the challenges so many are facing, it's a huge privilege to be able to help at this time. People are relying on Google's services more than ever and we've marshalled our resources and product development in this urgent moment."
The real concern is advertising revenue, as some of their usual partners have slashed online spending budgets. For these three months advertising revenue was $33.76 billion compared to $30.59 billion a year ago. YouTube revenue from ads was $4.04 billion versus $3.03 billion in the same quarter of the prior year. So, pretty resilient. Google Cloud revenue was $2.78 billion, well over the $1.83 billion for the same period a year ago.
As for the bottom line, first quarter earnings came in at $9.87 per share, which was slightly lower than expected. So, in summary, stronger than expected revenue, only slightly weaker profits.
More significantly, on the earnings call with executives last night, CFO Ruth Porat said that advertising revenue had rebounded in April. Her words were "users are returning to more normal behaviour" in search and "we haven't seen further deterioration." This points to a better second quarter than expected.
In after-hours trading, Google went up by just under $100 per share, or 8%, to trade at $1 331. If they hold that level during normal hours trading later today, that would mean that they are only down 13% from the all-time high of around $1 531 per share reached in mid-February 2020.
As ever, Google is a good stock to buy, hold and accumulate whenever possible. An absolute must have in every portfolio.