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Google shares rise on Q1 revenue beat

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Yahoo Finance’s Tech Editor Dan Howley joins the On The Move panel to break down the latest earnings report from Alphabet.

Video Transcript

JULIE HYMAN: Right now, though, we're going to talk more about those Alphabet earnings with our own Dan Howley. And Dan, it's interesting because on the face of it, the numbers didn't look fantastic and indeed, ad sales not performing well. I guess people are trying to look past it.

DAN HOWLEY: Yeah, really what we saw was, you know-- and this is something that Sundar Pichai, the CEO of Alphabet, and Ruth Porat, the CFO, kind of explained as the tale of two quarters. That's what they repeatedly went back to, saying that the beginning of the quarter was really just business as usual. They saw increases year-over-year that were in line with what they were expecting, strong ad sales, strong performance across its business lines. And then, of course, we saw the lockdown start to clamp down around the world, and that's when kind of the economic devastation that we're starting to see began to seep into the quarter. And so what they're saying is they're starting to see ad sales slow down.

Now, they did beat on expectations, though expectations are kind of wildly erratic at this point, as a result of the economic issues going on. But they did beat on revenue. And they did say, you know, look, we recognize that there will be issues with ad sales at the moment. But they're hoping that in the future, we will see an improved recovery, something along the lines of what everybody has been hoping for, V-shaped, and then that would allow them to see ad sales return to form.

And you know, anecdotally, they have said that they are cutting back on their own marketing budget. That's according to a report by CNBC basically saying, look, you know, we need to cut back on hiring at the moment, potentially only use hiring in certain cases that-- areas that really need it but cutting back there and more on cap-ex spending just to ensure that they are still nice and on an even keel. But it was an interesting report to hear from them, especially the way to describe it, that tale of two quarters.