Remote Work Could Bring Google $1B In Annual Savings
Google parent Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG) could save a whopping $1 billion annually if employees continue to work from home the rest of the year and not travel, book trips and hotels online due to the COVID-19 pandemic, according to a company filing.
What Happened: Google saved $268 million in expenses from company promotions, travel and entertainment versus the same period a year earlier, primarily as a result of COVID-19, the company said Wednesday.
That equates to more than $1 billion annually.
The search engine giant’s sales and marketing expenses increased $16 million in the first quarter ended March 31, 2021 on a year-on-year basis. The company attributed the increase in compensation expenses of $368 million to an 8% increase in headcount.
“This increase was largely offset by decreases in advertising and promotional as well as travel and entertainment expenses totaling $268 million, primarily as a result of COVID-19,” Google said in the filing.
The company had a total of 139,995 employees as of March 31, 2021. The majority of new hires during the quarter were engineers and product managers. Google does not break down the headcount by region.
See Also: Analyst Estimate Record Google Revenue From Pandemic-Driven Online Spend: WSJ
Why It Matters: The California-based company said in its annual report in March said that advertising and promotional expenses dropped by about $1.4 billion in 2020 as the company reduced spending, paused or rescheduled campaigns and changed some events to digital-only formats due to the pandemic.
Travel and entertainment expenses fell by $371 million.
Google was among the first big U.S. companies to allow employees to begin working from home last year due to the pandemic. The company has a Sept. 1 return to work deadline, according to a CNBC report.
Google’s Chief Financial Officer Ruth Porat told analysts in a post-earnings call earlier this week that the company is looking at a hybrid work-from-home, work-from-office model and less density per employee at its offices going forward.
See Also: Analyst Rating Updates For Alphabet Following Earnings Blowout
GOOGL Price Action: Shares of Alphabet were trading 0.94% higher at $2,381.12 at last check Thursday.
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