Google parent Alphabet’s revenue growth slows to slowest pace in 2 years

Alphabet’s quarterly revenue growth slows to its slowest pace in two years, but the internet advertising giant says its search and cloud businesses are still performing well despite worsening macroeconomics. become difficult.

The Google The parent company on Tuesday reported a 13% increase in revenue for the June quarter to $69.7 billion, missing estimates of $70.8 billion and marking the fourth consecutive quarterly decline year-over-year. before.

Operating margin also fell to 28%, down 3 percentage points from a year ago. Net income fell to $16 billion from $18.5 billion a year ago, missing Wall Street’s prediction of $17.4 billion. Earnings per share came in at $1.21, compared with analyst estimates of $1.27.

But Alphabet Chief Financial Officer Ruth Porat called the company’s second-quarter results “solid,” noting that revenue on a constant currency basis rose 16%.

She said on a call with analysts that any glaring weakness could be explained by reference to the previous year’s increase in demand, when Google benefited from the work-from-home trend. coronavirus caused after the initial shock of the viral outbreak. Twelve months ago, sales were 62% increase year after year.

“The very strong revenue performance last year continues to create tough pressure that will weigh on year-over-year growth in ad revenue for the rest of the year,” Porat said.

Alphabet executives often cite “uncertainty” in their prepared remarks, saying the difficult macro environment is causing supply chain and inventory problems across the board. wide, resulting in companies spending less on advertising.

One disappointment was that YouTube, where revenue of $7.3 billion missed the $7.5 billion forecast. “In YouTube and [Google] Network, the decrease in spend by some advertisers in the second quarter reflects uncertainty about several challenging factors to disaggregate,” Porat said.

She said the results show “power in search and momentum in the cloud”. Google’s Cloud division revenue grew 36% to $6.3 billion, but lost $858 million for the quarter, larger than the $591 million loss recorded a year ago. Revenue on Google Search grew 13% to $40.7 billion, slightly beating estimates.

Other Bets, which owns Google’s self-driving unit, Waymo, posted a loss of $1.7 billion, compared with a loss of $1.4 billion a year ago.

Forex movements amounted to a 3.7% drag last quarter and Porat warns investors expect “a bigger wind” this quarter as the US dollar traded at a 20-year high.

Jesse Cohen, senior analyst at, said stocks rose more than 5% in after-hours trading as investors “breached a sigh of relief” that the results weren’t worse, said Jesse Cohen. , senior analyst at, who described the quarter as “disappointing. . . across most business units”.

Analysts had expected a weak quarter, and in recent weeks forecasts have dimmered further as fears of a US recession mount and smaller rivals like Snap roll in. super high income.

Revenue growth of 13% put Alphabet on a clear downward trajectory. Growth was 23% in the March quarter, 32% in the December quarter and 41% in the September quarter.

CEO Sundar Pichai told analysts it was a good time for Alphabet to “raise our focus,” but he assured investors that the group would continue to make big and long-term investments. term.

“Personally, I find moments like these more enlightening,” says Pichai. “It was an opportunity to digest and. . . make sure we are working on the right things. . . having a long-term vision ensures we are continuing to invest in deep technology and computers. . . and reallocate resources to our most important priorities. “

Alphabet, which this month says it will slow down recruitment for the remainder of 2022, there were 10,108 additional people in the quarter, with most of the staff hired in technical roles.

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