The internet giant has announced quarterly results containing soothing signals for investors who are very worried about the economy.
Alphabet (GOOGL) – Get Alphabet Inc. Report financial results were eagerly awaited by investors wishing to take the true pulse of the economy.
Are we already in a recession and if so what is the extent of the damage to businesses? These are the questions that investors hoped the parent company of Google would answer.
The response given by the Mountain View, Calif. based firm is not completely clear, but there are some reassuring elements, or at least, ones that do not completely plunge investors into a deep slump.
Net income fell 13.6% to $16 billion in the second quarter ended June 30, compared to the second quarter of 2021.
Quarterly revenue increased 12.6% to $69.7 billion year on year. This is below the $69.9 billion anticipated by Refinitiv analysts. Alphabet says unfavorable currency effects, particularly the dollar, trimmed its revenue by 3.7%
Earnings per share (EPS) of $1.21 is a miss, coming under the $1.28 expected by analysts.
In detail, Alphabet is almost below expectations everywhere: Youtube’s advertising revenue rose only 4.8% over one year to $7.34 billion. Analysts were expecting $7.52 billion.
Overall, Google’s ad revenue growth rate slowed to 11.6% to $56.3 billion. The cloud business, which is seen as a growth engine, recorded revenues of $6.3 billion, up 35.6% year-on-year, but lower than the $6.41 billion expected.
Google shares rose nearly 3% in after market trading.
It must be said that investors feared the worst after the social network Snap (SNAP) – Get Snap Inc. Class A Report said last week that “forward-looking visibility remains incredibly challenging.”
Investors feared Youtube and Google’s advertising revenue would be impacted by shrinking promotion and marketing budgets for companies bracing for tough times. Online advertising is seen as one of the departments that will be among the first affected once the economic slowdown takes hold. In view of the results, Google and Youtube seem to be limiting the damage for the moment.
“In the second quarter our performance was driven by Search and Cloud,” commented CEO Sundar Pichai. “The investments we’ve made over the years in AI and computing are helping to make our services, particularly valuable for consumers, and highly effective for businesses of all sizes. As we sharpen our focus, we’ll continue to invest responsibly in deep computer science for the long-term.”
