Google-Parent Alphabet's Q1 Earnings Beat Expectations, Board Authorises $70-Billion Share Buyback

Google's cloud-computing business is now generating a profit, with an operating income of $191 million for the quarter, compared to a loss of $706 million in the previous year.

Alphabet, the parent company of search giant Google, has reported its first-quarter results, which exceeded the expectations of analysts. The company's shares rose by more than 4 per cent in after-hours trading before settling. Alphabet also announced that its board had authorised a $70 billion share buyback. In terms of figures, Alphabet reported earnings of $1.17 per share, beating the expected figure of $1.07 per share, according to Refinitiv. Meanwhile, revenue was $69.79 billion, compared to the expected $68.9 billion. Alphabet's revenue grew by 3 per cent, compared to the same period last year, breaking a streak of four consecutive quarters in which the company had missed consensus estimates.

Despite beating analyst expectations, Alphabet's ad revenue decreased to $54.55 billion, down from the previous year. YouTube ad revenue, which was $6.69 billion, remained in line with analysts' expectations but also fell compared to the previous year. The advertising weakness is partly due to the general economic climate, with advertisers reining in their budgets. The company is also facing increased competition from other platforms, such as TikTok, in short-form videos.

Google's cloud-computing business is now generating a profit, with an operating income of $191 million for the quarter, compared to a loss of $706 million in the previous year. However, revenue from Alphabet's Other Bets unit, which includes life sciences unit Verily and self-driving car company Waymo, fell to $288 million from $440 million. Artificial intelligence subsidiary DeepMind will no longer be reported in Other Bets, but as part of Alphabet's corporate costs.

To address the advertising weakness, Google has made significant cuts, including laying off 12,000 employees in January, about 6 per cent of its workforce. The company's CFO, Ruth Porat, announced multi-year cuts to real estate, employee services, and equipment this month. Alphabet reported charges of $2.6 billion related to the layoffs and office space reduction during the quarter.

During the earnings call, an investor asked about Google's partnerships with phone makers such as Samsung and Apple, given that Samsung is reportedly considering changing its default search engine from Google to Microsoft's Bing for its smartphones. Google CEO Sundar Pichai said the deals have always been competitive, but he is confident that Google will continue to improve its search function and be competitive in big deals, as reported by CNBC.

Pichai also announced that Google's annual developer conference next month will see updates to products, including Android and Pixel smartphones. The company is reportedly planning to launch its first foldable smartphone at a cost of more than $1,700.