Alphabet reports Q2 revenue of $38.3B, down 2% YoY, net income of $6.96B, down from $9.9B YoY, Other Bets operating loss grew to $1.1B
MOUNTAIN VIEW, Calif. - July 30, 2020 - Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended June 30, 2020.
Alphabet
Context & Ripple Effects
Three months after Q1 revenue still grew 13%, this is the first year-over-year decline in the corpus — the pandemic's advertising pullback finally catching Alphabet's core business. Net income fell harder than revenue, from $9.9B to $6.96B.
The pattern resolves quickly: by October, Q3 revenue rebounded 14% and the stock jumped on it, framing Q2 as a one-quarter shock rather than a structural break. Meanwhile Other Bets posted its third consecutive ~$1.1B operating loss.
First-order effects
Alphabet's advertising customers — the buyers behind nearly all of that $38.3B — cut spending enough to turn growth negative, directly compressing net income to $6.96B.
Other Bets' $1.1B quarterly loss now runs at roughly the same pace it did before the downturn, meaning Alphabet absorbed both a shrinking core and an unchanged long-term bet burn.
Second-order effects
A revenue decline at this scale forces cost discipline across Alphabet's cost centers — the trajectory later visible when Google Cloud narrowed its operating loss even as revenue scaled, showing management separating growth investment from fixed-cost drag.
Competitors in digital advertising face the same demand shock, so pricing rather than share becomes the near-term battleground for ad dollars recovering off the same low base.
Third-order effects
If the V-shaped recovery holds — Q3 back to double-digit growth, then later quarters compounding far above pre-pandemic levels — Alphabet's model proves resilient but confirms its fate is tied to the global ad cycle, not insulated from it.
The persistent ~$1.1B Other Bets loss across boom and bust quarters signals Alphabet will fund moonshots through downturns, keeping the option alive while core ads carry the P&L.
The trend: Alphabet's earnings are becoming a real-time read on the global digital-ad cycle, with the company using downturns to trim costs while sustaining unchanged bets on non-ads businesses.
If you're looking for one firm piece of evidence that advertising spending is still low, there you go. https://www.theverge.com/...
@techledes
Connie Guglielmo on x
“As people increasingly turn to online services, our platforms — from Cloud to Google Play to YouTube — are helping our partners provide important services & support their businesses,” said @Google CEO Sundar Pichai. @richardjnieva reporting. https://www.cnet.com/...
@alfredoyigal
Alfredo Yigal on x
@Techmeme They are not investing enough in other bets. Year by year they seem more like a traditional big company. Alphabet should be bolder or give dividends.
@loudmouthjulia
Julia Alexander on x
Google over all did not have a great quarter, but YouTube ads and Cloud were little bright spots.
@mhbergen
Mark Bergen on x
tl;dr for $goog earnings: beat Wall St estimates, stonk up; ads down 8% — about what analysts thought; cloud grew over 43% and is almost as big as YouTube ads.
@loudmouthjulia
Julia Alexander on x
Looks like a nice little increase in revenue for YouTube quarter over quarter, too. A source told me that they've noticed ads coming back up recently (over the last month or so). Not pre-COVID levels, but getting better. https://twitter.com/...
@ericjackson
Eric Jackson on x
*ALPHABET 2Q OTHER BETS OPER LOSS $1.12B, EST. LOSS $1.21B
@jyarow
Jay Yarow on x
Google (Alphabet if you *must*) only company of the biggies that is down. They foolishly announced a buyback instead of a stock split. https://www.cnbc.com/...
@loudmouthjulia
Julia Alexander on x
Ruth says that YouTube Premium numbers continue to grow, reminds the call that they reported more than 20 million YouTube Premium subs earlier this year. No breakout numbers on Premium/Music though. Does reiterate Music is a massive part of the Premium offering.
@loudmouthjulia
Julia Alexander on x
If YouTube TV is an ad play, which I don't doubt it in part absolutely is, why not take the hit on sub revenue and keep prices low to dominate market share? Bring people over to your vMPVD by offering the most for the least? Or for a relatively low cost all things considered.
@loudmouthjulia
Julia Alexander on x
“As YouTube TV gets more scale we will see more opportunities there we are still in the early stages of building out the products. Recently we added a bunch of new channels...making sure it's working well.” Sundar on YouTube TV, part one.
@loudmouthjulia
Julia Alexander on x
“We are obviously not just investing in YouTube the main product but YouTube TV as well, so ... where we can offer a bundle - advertisers are interested in streaming — ... is a big opportunity as well so we are focused on that.” Continued “YouTube TV is an ad play for us” route