Google parent Alphabet's ad sales recover, revenue tops forecasts

Google parent Alphabet Inc. reported first-quarter results that exceeded analysts’ estimates, as the company’s dominant search business weathered the economic downturn and its cloud unit turned a profit for the first time. Shares rose on news that Alphabet’s sales, excluding partner payouts, were $58.07 billion in the quarter, beating analysts’ average estimate of $56.98 billion. Search advertising performed well even as Google faces heightened competitive threats from Microsoft Corp. and OpenAI, which are challenging the search giant through conversational chatbots using artificial intelligence. More news: Google gives post-cookie ad tech update Sign up for Ad Age newsletters From influencer marketing to agencies, get the latest news and analysis delivered to your inbox Click here Search advertising has been more resilient during swings in the economy than spending on social media, where digital media competitors such as Facebook parent Meta Platforms Inc. and Snap Inc. have seen more dramatic declines in demand. Even video site YouTube, which has been a drag on the company’s results in recent quarters, performed better than expected, drawing $6.69 billion in advertising revenue, though it still registered a drop from the year-ago quarter. “Search performance will serve as an early indicator of Google’s ability to maintain its dominance in the area responsible for the majority of its revenue,” Evelyn Mitchell, a senior analyst with Insider Intelligence, wrote in a note. Recent news: Google expands visibility into who's behind ads The company’s closely watched cloud unit, which is much smaller than competitive offerings from Microsoft and Amazon.com Inc., reported a profit of $191 million. As its core search advertising business matures, Google sees cloud as a growth area. Alphabet said in a note to investors ahead of the results that it had shifted the reporting of some costs from Google Cloud to Google Services, likely aiding the long-running campaign for profitability. Alphabet leadership has been waging a cost-cutting drive to preserve the company’s profit margins as advertisers trim their budgets. In January, the company cut about 12,000 people. “We remain committed to delivering long-term growth and creating capacity to invest in our most compelling growth areas by re-engineering our cost base,” Chief Financial Officer Ruth Porat said in an interview. “We have seen ongoing headwinds in what we continue to describe as an ongoing challenging macroeconomic environment.” Net income was $15 billion, or $1.17 per share, compared with Wall Street’s $1.09-per-share estimate. The company also authorized share buybacks of up to $70 billion. Alphabet shares rose as much as 5.9% after closing at $103.85. The stock has gained 17.7% so far this year. —Bloomberg News Subscribe to Ad Age Sign up now for the latest industry news and analysis Click here

Google parent Alphabet's ad sales recover, revenue tops forecasts

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