Google CEO Sundar Pichai speaks during the Google I/O keynote at the Shoreline Amphitheater in Mountain View, California on May 7, 2019.
Josh Edelson | AFP | Getty Images
Alphabet reported weaker-than-expected earnings and revenue for the second quarter. Shares rose about 2% in extended trading.
Here’s how the company did it:
- Earnings per share (EPS): $1.21 vs $1.28 expected, according to Refinitiv
- Revenue: $69.69 billion vs. $69.9 billion expected, according to Refinitiv
- YouTube ad revenue: $7.34 billion vs. $7.52 billion forecast, according to StreetAccount
- Google Cloud revenue: $6.28 billion vs. $6.41 billion forecast, according to StreetAccount.
- Traffic Acquisition Costs (TAC): $12.21 billion vs. $12.41 billion expected, according to StreetAccount
Revenue growth slowed to 13% in the quarter from 62% a year earlier as the company benefited from the post-pandemic reopening and consumer spending picked up.
Currency fluctuations from a strengthening dollar reduced revenue growth by 3.7 percentage points, Chief Financial Officer Ruth Porat told CNBC’s Deirdre Bosa. Porat said the strength of the dollar will further affect next quarter’s results.
Porat also characterized the current outlook as “uncertainty in the global economic environment.”
Advertising revenue rose just 12% to $56.3 billion as marketers increased spending to manage inflationary pressures. The most notable slowdown came at the YouTube division, where sales rose 5% after jumping 84% in the same period a year ago.
In addition to the overall reduction in ad spending, YouTube is also facing increased competition from TikTok in short-form videos.
The report comes days after Snap announced disastrous quarterly results and said it plans to slow hiring because “forward visibility remains incredibly challenging.” Unlike Snap, Alphabet shares rose slightly in extended trading despite the failure, as investors may have been expecting more worrisome signs.
Revenue from Alphabet’s Other Bets segment, which includes self-driving car unit Waymo as well as some health-tech projects and the company’s venture arms, rose $1 million from a year earlier to to 193 million dollars. It lost $1.69 billion in the quarter.
Google Cloud, which missed revenue expectations, lost $858 million in the quarter. The cloud division is trying to take share from Amazon Web Services and Microsoft Azure, the two main players in the market. Microsoft said on Tuesday that revenue from Azure and other cloud services grew 40% during the period.
Alphabet said its workforce rose 21 percent to 174,014 full-time employees from 144,056 a year earlier. However, the company said last month that it will slow the pace of hiring and investments until 2023, with Chief Executive Sundar Pichai telling employees in a memo: “We are not immune to economic headwinds.”
Alphabet shares have lost about a quarter of their value this year.
This is breaking news. Check back for updates.
WATCH: With recession looming, ad spending will drop