Shares of Alphabet were rising sharply in after-hours trading on Tuesday after the search and ad giant posted better-than-expected revenue for the March quarter.
Alphabet stock was up 9.2% in after-hours trading after reporting quarterly revenue of $41.16 billion, beating a $40.82 billion analyst consensus and reflecting growth of 13% year over year in U.S. dollars.
Alphabet's earnings, excluding a $1.7 billion penalty from the European Commission that recently cleared, came in at $9.87 per share, below a $10.68 consensus.
“Our business, led by Search, YouTube, and Cloud, drove Alphabet revenues to $41.2 billion, up 13% versus last year, or 15% on a constant currency basis,” said Alphabet's CFO Ruth Porat in a press release. “Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues. We are sharpening our focus on executing more efficiently, while continuing to invest in our long-term opportunities.”
YouTube ad revenue, which Alphabet broke out for the first time in the December quarter, rose 33% to $4.04 billion, following 31% growth in the prior quarter. Google Cloud revenue rose 52% to $2.78 billion, a slight decrease from the prior quarter's 53% growth in the segment.
Tech investors were closely watching Alphabet's earnings as one of the first major indicators of the impact on the ad market and outlook resulting from the coronavirus pandemic.
Analysts had slashed estimates for Alphabet in recent weeks on weakening demand for digital advertising, owing in part to a steep drop in travel-related advertising and an uncertain economic environment overall.
Shares of Google have fallen roughly 7% year to date and closed at $1,234.30 per share on Tuesday heading into its earnings report.