The financial casualties of coronavirus pandemic have been revealed across the companies of Alphabet as the group recorded a 30% tumble in net income in the second quarter compare with the same period the previous year. Still, with as many diverse holdings as it has, things aren't as bad for Google's parent company as they seem — at least for the time being.
Alphabet's net revenue for the quarter ending June 30 was $38.3 billion, just about flat from 2019. Operating turnover was at $6.38 billion. Where business in the Google's search and adserve divisions slowed by about 10% each, YouTube ads, and various subscription offerings including from Google Cloud Platform, Google Play, and YouTube Music and Premium nearly made up the gap.
Globally, most sector revenues improved with time as many countries gained a better handle on COVID-19 and consumers began to shift away from coronavirus queries. However, pains in the greater economy and the health crisis will still have an outsize impact on the trajectory.
The biggest expenses the company pointed to were in cloud infrastructure costs and depreciation and in content acquisition for YouTube Music and YouTube TV — readers may recall the recent price hike for the latter service as it brought a number of channels from ViacomCBS on board. YouTube also expanded its paid services to rafts of new markets which substantiated the need for more local content buys.
COVID-19 responses were big cost drivers for Alphabet as well, especially as its headcount jumped by 4,450 from March to 127,498 — most positions were in engineering and product management. Hiring continues to slow except in certain lucrative areas like Cloud. There were also upticks in related customer credits for unused services.
A few loose notes:
- The COVID-19 tracking APIs developed by Apple and Google are now in public health apps in 12 countries. Device-based tracking is expected to roll out in the next several weeks.
- A weekly peak of 6 million participants used Google Meet during the quarter.
- The company repurchased $6.9 billion of shares this quarter and has approved more rounds of Class C stock buybacks totaling up to $28 billion.
- Alphabet CEO Sundar Pichai said he was looking forward to Google's fall hardware launch while CFO Ruth Porat noted a correlated ramp-up in marketing spend for later this year.
- Smart auto bet Waymo closed a $3.2 billion funding round.
- Drone delivery bet Wings is delivering library books in southwest Virginia.