Big tech company and Google’s parent Alphabet reported second-quarter earnings results that failed to meet expectations. The company’s stock, however, was up 4 percent in extended trading.
Alphabet reported earnings per share of $1.21, falling below the expectation of $1.28 that analysts had expected, according to Refinitiv. Second quarter revenue stood at $69.69 billion, just falling slightly off the $69.9 billion that analysts had forecasted, according to Refinitiv.
For the quarter, YouTube advertising revenue came in at $7.34 billion. Analysts had expected this category’s revenue to come in at $7.52 billion for the quarter, according to StreetAccount.
While analysts had expected Google Cloud revenue to come in at $6.41 billion for the second quarter, according to StreetAccount, Alphabet reported $6.28 billion. Google Cloud lost $858 million during the quarter as it continues to try to take hold in the market where Amazon Web Services and Microsoft Azure are the biggest players.
Traffic acquisition costs (TAC) stood at $12.21 billion compared to the $12.41 billion that analysts had expected, according to StreetAccount.
Compared to a year earlier, revenue growth reduced to 13 percent from 62 percent. The company had been enjoying post-pandemic gains and increased consumer spending. The company’s Chief Financial Officer Ruth Porat noted that fluctuations in currency deducted 3.7 percent of revenue growth. She added that the dollar’s strength will hit the third quarter’s results even harder. The CFO described the current outlook as an “uncertainty in the global economic environment.”
Advertising revenue was up just 12 percent to $56.3 billion. Marketers had to reel in their spending to deal with inflationary pressures. For context, sales in the YouTube division were up just 5 percent compared to 84 percent in the same period last year. YouTube, as well as other rivals, are dealing with increased competition from the short video sharing platform TikTok.
Unlike Snap Inc. which saw its shares plunge after its earnings results were announced, Alphabet’s share rose slightly suggesting that investors may have been expecting worse.
Google’s Search and Other revenue came in at $40.69 billion and is up from $35.85 billion reported a year ago. Travel and retail queries boosted the figures, Google’s Chief Business Officer Philipp Schindler said.
Alphabet’s Other Bets segment which envelopes its self-driving car unit Waymo, health tech projects, and its venture arm grew by $1 million from a year ago to $193 million. It lost $1.69 billion during the quarter.
The company failed to provide guidance for the third quarter but analysts expect a 14 percent growth in revenue to $293.9 billion for the year, according to Refinitiv.
Alphabet shares have lost almost a quarter of their value since this year took off.
The company said its headcount increased 21 percent to 174,014 full-time employees from 144,056 in the same period last year. The company, however, announced plans to slow hiring through the year, last month.