Alphabet (Google) Q2 Earnings Report: A Missed Mark on Revenue

Alphabet (Google) reported weaker-than-expected earnings and revenue for the second quarter, 2022. Moreover, the figures declined in all key parameters, including revenue on YouTube, advertising sales on Google and the cost of purchasing traffic.

Here's how the company did:

• Earnings per share (EPS): $1.21 vs. $1.28 expected
• Revenue: $69.69 billion vs. $69.9 billion expected
• Traffic acquisition costs (TAC): $12.21 billion vs. $12.41 billion expected

Alphabet (Google) Fell Short of Revenue Expectations

Alphabet's (Google) fiscal 2022 Q3 and Q4 were successful, as revenue and earnings were up nearly 30% in those periods. This was due to increased consumer activity and recovering markets. However, since the beginning of 2022, the company has been struggling amid geopolitical tensions and economic instability.

In Q1 2022, Alphabet's (Google) earnings per share were below the forecast and revenue was in line with the consensus. Q2 was even worse, as all indicators are below the forecast.

Currency fluctuations from a strengthening dollar knocked 3.7 percentage points off revenue growth, CFO Ruth Porat told CNBC's Deirdre Bosa. Porat said the strength of the dollar will hit next quarter's results even harder

Porat also characterized the current outlook as one of "uncertainty in the global economic environment."

This is probably a signal that in the next fiscal quarter, the company will not be able to recover its position and show the best result among the tech giants.

Because advertising revenue increased just 12% to $56.3 billion, as marketers reeled in their spending to manage inflationary pressures. The most notable deceleration was in the YouTube division, where sales rose 5% after jumping 84% in the same period a year ago.

What to Expect from Alphabet (Google) Shareholders

Alphabet (Google A) Stocks Trading Chart, July 2022

Despite the negative quarterly earnings report, the shares of Alphabet (Google) remain stable. This comes against the backdrop of Snap announcing disastrous quarterly results and saying it plans to slow hiring because "prospect visibility remains incredibly challenging".

But in contrast to Snap, Alphabet shares rose slightly after its numbers were released, as investors may have been expecting more troubling signs.

The market reaction to this situation could potentially be long-term Therefore, a decline in the value of Alphabet (Google) shares is could be more possible in the next few months than a rapid rise.

In addition, the revenue of some of the company's projects has increased. But that didn't help the giant improve its results. For example, Google's Search and other revenue was $40.69 billion, up from $35.85 billion the year prior, the report showed. That growth was boosted by travel and retail queries, said Philipp Schindler, Google's chief business officer.

In general, representatives of the company expect that the current difficulties will last at least until the end of 2022

Summary

• Alphabet (Google) reported weaker-than-expected earnings and revenue for the second quarter 2022.
• The company reported earnings per share of $1.21 vs $1.28 expected.
• Alphabet shares have lost about a quarter of their value this year.
• Representatives of the company expect that the current difficulties could last at least until the end of 2022.

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