Earnings

Alphabet Bolsters Advertising Features As Cloud Gains Traction Amid Pandemic

Google

Alphabet, the parent company of Google, strengthened its advertising capabilities in the second quarter as it looked to help connect business with customers through new features amid the pandemic.

“We’re working to help people, businesses and communities in these uncertain times,” Sundar Pichai, CEO of Google and Alphabet said in an announcement. “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.”

Pichai said on a call with analysts that the company is assisting merchants in reducing their costs and bolstering their reach in a number of ways. For one, merchants can now list their products for free on the Google Shopping tab and on search. Pichai also said the company recently announced that sellers on Buy on Google will no longer pay a commission fee.

Additionally, Pichai said the company is providing greater optionality to retailers by opening up its platform to third-party providers, beginning with PayPal and Shopify.

Pichai said on the call that the company also “gave search advertisers the ability to add high-quality images to their ads, helping shoppers quickly see products to consider and take action faster. We added features to make video ads more easily shoppable and browsable on YouTube, as more businesses are shifting to online to offset physical store closures.”

“For [small- to medium-sized businesses] SMBs, we are proud that so many are taking advantage of new features, including smart campaigns to reach new online audiences and promoted pins on Google Maps to let customers know that their businesses are open,” Pichai also noted.

Pichai also said the company saw “good traction” in areas like Google Play, YouTube Subscriptions and Cloud.

“YouTube Premium Music and TV subscriptions performed well during the quarter,” Pichai said. “We are seeing strong demand for these services and are adding content regularly.”

Pichai said that Google Play app and game downloads were up over 35 percent year over year in the second quarter, “which means that revenue for developers continue to grow.”

Drilling down into the numbers, YouTube revenues were up 5.8 percent year on year to $3.8 billion, while total advertising revenues came in at $29.9 billion, down from $32.5 billion last year.

Other revenues were up 25.6 percent year on year to $5.1 billion. And revenues for “Other Bets,” which covers the company’s Waymo self-driving offering and life sciences operations — was $148 million, down 8.6 percent year on year.

Ruth Porat, chief financial officer of Alphabet and Google, said on the call that Google saw a gradual return in users’ search activity “to more commercial topics throughout the quarter, followed by an increase in spending by advertisers.”

For Google Cloud, Porat said, “We are pleased with the traction we’re having with large customers who are making multiyear commitments with us.”

As far as its overall results, Alphabet Inc. reported diluted earnings per share of $10.13 on $38.3 billion in revenue for the second quarter. Analysts were expecting $8.34 in earnings per share on $37.36 billion in revenue.

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