YouTube Q1 Revenue Climbs 33% to $4 Billion, Parent Alphabet Saw Big Ad Sales Slowdown in March
By Todd Spangler
LOS ANGELES (Variety.com) – YouTube generated $4.04 billion in ad revenue for the first quarter of 2020, up 33% from the year prior. Alphabet, the parent company of Google and YouTube, topped Wall Street estimates for Q1 revenue but fell short on net profit — and said ad sales had significantly fallen in March amid the coronavirus crisis.
Overall, Alphabet reported $41.16 billion in revenue, up 13% year over year, and adjusted net income of $6.84 billion ($9.87 per share). Analysts on average expected the company to post revenue of $40.38 billion and EPS of $10.33.
Alphabet first broke out YouTube revenue in announcing fourth-quarter and full-year 2019 results, along with sales for Google Search and Google Cloud. YouTube generated $15.15 billion in ad revenue last year, up 36%.
On the Q1 revenue beat, shares of Alphabet rose over 8% in after-hours trading Tuesday. Investors have been worried that the coronavirus crisis could leave a huge dent in the internet giant’s results , with advertising expected to decline given the shutdown of large portions of the world economy.
CFO Ruth Porat, in prepared remarks, said Alphabet’s overall performance was strong in January and February, “but then in March we experienced a significant slowdown in ad revenues” — a year-over-year percentage decline in the mid-teens. She added that the company is “sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities.”
YouTube’s direct-response advertising continued to have “substantial” growth over the entire quarter, while brand advertising began to experience “a headwind” in mid-March, Porat told analysts on the earnings call. By the end of March, total YouTube ads revenue growth had decelerated to a year-over-year growth rate in the high single digits, she said.
The second quarter “will be a difficult one for our advertising business,” Porat said, but declined to provide specific guidance. Alphabet’s ad business should recover once the global economy “normalizes” post-pandemic, but she said it was “premature to comment on timing given all the variables here.”
Referring to the COVID-19 crisis, Sundar Pichai, CEO of Alphabet and Google, said in announcing the results, “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.”
Earlier Tuesday, YouTube announced the launch of fact-check information panels for U.S. users who search for specific conspiracy theories and misinformation about the coronavirus outbreak .
With the coronavirus outbreak, overall Google usage has increased, Pichai said on the earnings call, with YouTube watch-time up significantly and a particular spike in live-streaming. He said Google’s dedicated COVID-19 information hub has received over 20 billion views.
Given economic uncertainty, Alphabet will slow down the pace of hiring for the remainder of 2020, Pichai said. The company had 123,048 employees at the end of Q1, up 3.5% from 118,899 at the end of 2019.
(Pictured above: YouTube CEO Susan Wojcicki)
