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Alphabet Posts Q2 2022 Report, Misses on Earnings & Revenue

UTC by Tolu Ajiboye · 3 min read
Alphabet Posts Q2 2022 Report, Misses on Earnings & Revenue
Photo: Sundar Pichai / Twitter

Multinational tech company Alphabet has posted its Q2 2022 report which shows a 13% slowdown in revenue growth.

Google‘s parent Alphabet Inc (NASDAQ: GOOGL) recently posted its Q2 2022 report showing weaker-than-expected earnings and revenue. The tech company also fell short of revenue expectations for advertising and Google Cloud.

Breakdown of Alphabet Q2 2022 Report

Alphabet’s earnings per share (EPS) for Q2 2022 came in at $1.21 compared to the general consensus estimate of $1.28. In addition, the American multinational reported a revenue haul of $69.69 billion for the period ended June 30th. This figure came in on par with the expectations of analysts who had forecast a fractionally higher sum of $69.9 billion.

Furthermore, Alphabet also reported $7.34 billion in YouTube advertising revenue, which is less than the $7.52 billion expected by analysts. The company also raked in a relatively lower sum for Google Cloud revenue at $6.28 billion versus the $6.41 billion expected. Lastly, Alphabet’s underperformance for the quarter also extended to its Traffic acquisition costs (TAC), where it amassed $12.21 billion. By comparison, this was around $200,000,000 less than analysts’ projections of $12.41 billion, according to StreetAccount.

There was a relatively small increase of 12% for Alphabet in advertising revenue which now stands at $56.3 billion. This resulted from a substantial cut back in spending by marketers trying to cope with inflationary pressures. In fact, the most noticeable reduction in spending was in Alphabet’s YouTube division, where sales only rose 5%. The company’s YouTube unit climbed by a far substantial percentage of 84% back in Q2 2021. In addition to a drawdown in advertising spending, YouTube currently faces competition for short-form videos from the Chinese video hosting platform TikTok.

Alphabet’s revenue growth slowed to 13% in the second quarter of 2022 from 62% in the same period last year. During the 2021 period, the tech giant benefited from increased consumer spending amid the post-pandemic reopening.

However, despite the numbers for the 2022 second quarter, Alphabet’s stock rose more than 4% in extended trading. This could be because investors were expecting more troubling optics.

Alphabet CFO Weighs In on Performance

Alphabet CFO Ruth Porat commented on the company’s performance for the second quarter. According to her, currency fluctuations from a strengthening dollar knocked 3.7 percentage points off the company’s revenue growth. Furthermore, Porat also estimated that the increasing strength of the dollar would impact the results of the third quarter even harder. The Alphabet CFO also described the current outlook of the broader markets as an uncertain global economic environment. She added that:

“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.”

Although Alphabet did not provide a revenue forecast, analysts estimate a 14% growth to $293.9 for the year. Furthermore, as it stands, Alphabet shares have lost around a quarter of their value this year.

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