Alphabet has not done as well financially this quarter, producing weaker-than-expected earnings and revenue. In extended trading, the share price increased by more than 4%.
Check out the performance metrics of the company:
- The company had an EPS of $1.21 this quarter, as opposed to what they had previously predicted to be an EPS of $1.28, according to Refinitiv.
- According to Refinitiv, Alphabet saw revenues of $69.69 billion against expectations of $69.9 billion.
- According to StreetAccount, the advertising revenue from YouTube was $7.34 billion vs. $7.52 billion expected.
- According to StreetAccount, Google cloud revenue came in slightly below analyst expectations with $6.28 billion in revenue while $6.41 billion was expected.
- According to StreetAccount, the Traffic acquisition costs (TAC) was $12.21 billion while $12.41 billion was expected.
From 62 percent a year earlier, when the company was profiting from the post-pandemic reopening and rising consumer spending, revenue growth slowed to 13 percent in the quarter.
According to CFO Ruth Porat, currency swings brought on by a stronger dollar reduced revenue growth by 3.7 percentage points. The results for the upcoming quarter will be much more negatively impacted, according to Porat.
The current outlook, according to Porat, is one of “uncertainty in the global economic environment.”
Though it was only a 12% increase to $56.3 billion, marketers watched inflation and limited their advertising to deal with it. The YouTube sector saw the biggest slowdown, with sales increasing 5% after increasing 84% during the same period last year.
While on the whole there is less money going into advertisements, TikTok poses an even greater threat in the short-form video arena.
Days before the report, Snap revealed its appalling quarterly numbers and stated that company will be slowing hiring because “forward-looking visibility remains incredibly challenging.” Unlike Snap, Alphabet’s shares increased somewhat after its financial results were announced because investors may have anticipated more concerning trends.
The company’s revenue from Search and Other was $40.69 billion compared with $35.85 billion the year before, according to the report. According to Philipp Schindler, Google’s chief business officer, this growth was fueled by travel and retail enquiries.
Alphabet’s Other Bets sector had an increase of $1 million from the prior year to $193 million in revenue. This section comprises Waymo, Alphabet’s self-driving car division, as well as several health tech initiatives and the company’s venture capital divisions. It suffered a $1.69 billion loss for the quarter.
Google Cloud lost $858 million, not meeting revenue expectations, during the quarter. The main two competitors in the market, Amazon Web Services and Microsoft Azure, are being challenged by the cloud division. On Tuesday, Microsoft reported a 40% increase in the period’s income from Azure and other cloud services.
Alphabet has announced that its headcount has increased by 21% in one year to 174,014 from 144,056. But the business said this month that it would cut down hiring and investment through 2023, and CEO Sundar Pichai informed staff in a memo, “we’re not immune to economic headwinds.”
It is anticipated that challenges will continue through the end of 2022.
“Going forward, the very strong revenue performance last year continues to create tough comps that will weigh on year on year growth rates of advertising revenues for the remainder of the year,” Porat said.
Although Alphabet didn’t disclose a sales projection, Refinitiv reports that analysts anticipate growth of 14% to $293.9 billion this year. About a fifth of the value of the shares has been lost this year.