Google Parent Alphabet Beats Q1 Forecasts Despite $2.6B Hit From Reduction In Workforce And Office Space, YouTube Advertising Downturn

Alphabet, the parent company of Google and YouTube, bucked the recent trend in the tech sector and topped Wall Street’s financial expectations in the first quarter.

The company posted $69.8 billion in revenue, up 3% from the same quarter a year ago, and diluted earnings per share of $1.17, down 5%. Analysts’ consensus outlook was for revenue of $68.8 billion and earnings of $1.06 per share.

Those results were achieved despite a $2.6 billion charge taken during the quarter due to reductions in workforce and office space. Alphabet announced last January it was cutting 12,000 jobs, about 6% of its workforce. The largest staff reduction in company history followed what was described as a “rigorous review” of operations.

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Investors responded positively to the earnings report, sending shares of Alphabet up almost 4% in after-hours trading. The stock more than doubled from early 2020 to the first half of 2021 as the pandemic magnified the draw of Alphabet’s products and services, but shares have since essentially moved sideways.

YouTube advertising revenue slipped 3% to $6.7 billion. While that is consistent with slight downturns being reported by a wide range of ad sellers due to larger challenges in the economy, it also noteworthy for marking the third consecutive quarter of negative movement for YouTube advertising. Total digital advertising revenue slipped less than 1%, to $54.5 billion, just the third year-over-year decrease in its main ad business in company history. The dip was smaller than what analysts were expecting.

In the company’s earnings release, CEO Sundar Pichai singled out the performance of the company’s search and cloud operations.

Ruth Porat, CFO of Alphabet and Google, said the outlook for the current quarter remains uncertain.

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