Josh Adelson | AFP | Getty Images
Alphabet reported weaker-than-expected earnings and revenue for the second quarter. The stock rose about 2% in extended trading.
Here’s how the company did:
- Earnings per share (EPS): Expect $1.21 versus $1.28, according to Refinitiv
- he won: $69.69 billion versus the $69.9 billion forecast, according to Refinitiv
- YouTube advertising revenue: $7.34 billion vs. $7.52 billion expected, according to StreetAccount
- Google Cloud revenue: $6.28 billion versus the expected $6.41 billion, according to StreetAccount.
- Traffic Acquisition Costs (TAC): 12.21 billion dollars for Expected to be $12.41 billion, according to StreetAccount
Revenue growth slowed to 13% in the quarter from 62% a year earlier, when the company was benefiting from a post-pandemic reopening and consumer spending was on the rise.
CFO Ruth Porat told CNBC Deirdre Bosa that currency fluctuations from the dollar’s rally caused a 3.7 percentage point drop from revenue growth. Borat said that the strength of the dollar will have a greater impact on the results of the next quarter.
Borat also described the current outlook as “an uncertainty in the global economic environment.”
Ad revenue increased only 12% to $56.3 billion as marketers squandered their spending to manage inflationary pressures. The notable slowdown was in the YouTube division, where sales are up 5% after jumping 84% in the same period a year ago.
In addition to the overall decline in ad spend, YouTube also faces stiff competition from TikTok in its short videos.
The report comes days after Snap reported disastrous quarterly results and said it plans to slow hiring because “the outlook remains very challenging”. Unlike Snap, Alphabet shares rose slightly in extended trading despite the failure, as investors may have been expecting more worrying signals.
Revenue in Alphabet’s other bets division, which includes the self-driving car unit Waymo as well as some health tech projects and the company’s investment arms, rose $1 million from the previous year to $193 million. It lost $1.69 billion during the quarter.
Google Cloud, which missed revenue expectations, lost $858 million during the quarter. The cloud division is trying to get a share of Amazon Web Services and Microsoft Azure, the two biggest players in the market. Microsoft said Tuesday that revenue from Azure and other cloud services grew 40% in the period.
Alphabet said its headcount rose 21% to 174,014 full-time employees from 144,056 a year earlier. However, the company said last month that it would slow the pace of hiring and investments through 2023, and CEO Sundar Pichai told employees in a note: “We are not immune to economic headwinds.”
Alphabet shares have lost about a quarter of their value this year.
This is urgent news. . Please check back for updates
Watch: As the recession approaches, advertising spending will decrease