Google’s parent company Alphabet reported the first revenue decline in the company’s 22-year history when it released its Q2 earnings on Thursday. During the second quarter of this year, Alphabet made $38.3 billion in revenue, compared to $38.9 billion during the same time last year, which is a 2% decrease. Chief Financial Officer of Alphabet and Google, Ruth Porat, said in the earnings call that a gradual improvement in advertising largely drove revenue.
Alphabet reported advertising revenue of $29.9 billion for the second quarter, compared to $32.5 billion in the second quarter of 2019. During a hearing over antitrust concerns on Wednesday, Google CEO Sundar Pichai said that Google earns more than $100 billion in ad revenue a year. One bright spot was YouTube, where advertising revenue rose to $3.81 billion, from $3.6 billion last year. Google’s Cloud division saw rising revenue as well, to $3.01 billion from $2.1 billion in the year-ago quarter.
“We’re working to help people, businesses, and communities in these uncertain times,” Sundar Pichai, CEO of Google and Alphabet, said in a statement on Thursday. “As people increasingly turn to online services, our platforms — from Cloud to Google Play to YouTube — are helping our partners provide important services and support their businesses.”
Ruth Porat acknowledged that the company was continuing to cope with the changes to the online market from the pandemic. “In the second quarter our total revenues were $38.3B, driven by a gradual improvement in our ads business and strong growth in Google Cloud and Other Revenues,” Porat said in a statement. “We continue to navigate through a difficult global economic environment.”
Porat said during an investor call Thursday that the “year on year decline in sales and marketing expenses was due to lower advertising and promotional spend as we paused or rescheduled campaigns as we pivoted to digital formats for flagship events.”
Google Search revenue was down by 10 percent during the second quarter of 2020 as compared to the same time period in 2019. YouTube, owned by Google, saw a 6 percent increase in advertising revenue.
Porat noted that the company “saw a gradual return and user search activity to more commercial topics throughout the quarter, followed by an increase in spending by advertisers.”
She also announced that Alphabet hired 4,450 new employees during the second quarter, mostly as engineers and product managers, and said Google would continue to hire “aggressively” for areas such as Google Cloud while overall slightly “decelerating” hiring. The earnings report was rolled out at the same time Amazon, Apple, and Facebook announced their second-quarter earnings.