Alphabet Inc. Q2 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Total revenue was 38.3 billion dollars, down 2 percent year over year, and flat on a constant currency basis. The decline was driven by lower advertising revenue from Search and Network, offset by growth in Google Cloud, YouTube subscriptions, and Google Play.
  • Foreign exchange rates created roughly a 2 percent headwind to reported revenue.
  • The advertising environment showed gradual improvement throughout the quarter after a significant slowdown at the end of Q1. By late June, Search ad revenue trends returned to flat year over year.
  • Non-advertising businesses, including Cloud, YouTube subscriptions, and Play, delivered strong growth and helped offset weakness in ads.

Business Segment Highlights

Google Advertising

  • Search: Revenue trends improved from midteens percentage declines at the end of March to flat year over year by the end of June. July saw modest improvement. Trends were supported by a return to more commercial queries and increased advertiser spending.
  • YouTube: Ended March with high single-digit year-over-year revenue growth, heavily impacted by brand advertising declines. Brand headwinds moderated through Q2 and further improved in July. Direct response ads remained consistently strong.
  • Network: Improved toward the end of Q2, with slight additional improvement in July.

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Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Alphabet Second Quarter 2020 Earnings Conference Call. . I'd now like to hand the conference over to your speaker today, Jim Friedland, Director of Investor Relations. Please go ahead. James Friedland: Thank you. Good afternoon, everyone, and welcome to Alphabet's second quarter 2020 earnings conference call. With us today are Sundar Pichai and Ruth Porat. Now I'll quickly cover the safe harbor. Sundar Pichai: Thank you, Jim, and thank you, everyone, for joining in. It's certainly been a busy week, and I'm glad to be here. I hope everyone is staying safe and well. All of us at Google continue to send our deepest gratitude to everyone on the front lines of the pandemic all around the world. I also want to personally thank all our employees who continue to work so hard to make sure our products and services are available for everyone right now. People looking for important health information, hard-hit businesses working to inform customers about opening hours or delivery options or teachers connecting to their students. The macroeconomic environment caused by the pandemic created headwinds for our business. Our revenue declined on a reported basis and is flat year-over-year on a fixed FX basis. Like other companies, this quarter, we saw the early signs of stabilization as users return to commercial activity online. This is true across most of our advertising verticals and geographies. Of course, the

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