Alphabet: Quarterly Earnings Disappoint￼
Alphabet, the parent company of Google, GOOGL 104.48 USD +1.96 (1.91%), posted quarterly results yesterday, falling short of Wall Street projections on both the top and bottom lines due in large part to lower-than-expected revenue from YouTube ads.
Following the revelation, investors dumped over 6% of their holdings in Alphabet. In the most recent few quarters, the market for digital advertising has been hit by a slowdown in expenditure, which may be attributed to corporations cutting back their budgets in response to rising inflation and interest rates.
Third-largest tech business by market value Alphabet (Google) Inc. (GOOGL) is expected to post another quarter of declining earnings and revenue growth in the third quarter of 2022 due to the difficult ad revenue environment and rising competition from TikTok.
According to the most recent projections from Visible Alpha, Alphabet’s profits per share (EPS) fell by more than 10% to $1.25, while revenue increased by only 8.7%, to $70.8 billion.
Between the first quarter of 2019 and the fourth quarter of 2021, Alphabet’s earnings per share (EPS) decreased in three quarters while it increased by more than double in three other quarters.
The year-over-year expansion of profits was significantly slowed down all through 2021, and it has continued to contract throughout the first half of 2022. For the third quarter, analysts anticipate yet another period of declining sales.
The revenue of the corporation has had ups and downs, with growth reaching an all-time high in the middle of 2021 and then leveling out. A decline of 41% in the preceding year’s quarter would be reduced to an estimated decline of 8.7% in the current quarter.
One of Alphabet’s core business sectors, Google Cloud also serves as an important indicator of the overall performance of the company. Cloud computing gives developers access to a platform that is extremely scalable and stable, allowing them to construct, test, and deploy applications with more ease. In addition to this, it provides workspace collaboration tools, which can be accessed through applications such as Gmail, Docs, Drive, Calendar, Meet, and many others. The collection of fees that are associated with providing certain services results in the generation of revenue.
The market for cloud services is significantly less competitive for Alphabet than its search business, and it is expanding at a rapid clip. Despite this, the competition is severe, particularly with the presence of big adversaries such as Azure from Microsoft Corporation (MSFT) and Amazon Web Services from Amazon.com, Inc. (AMZN).
Over the course of the past 15 quarters, Google Cloud’s revenue increased by at least 50% in six of those quarters. However, in recent times, this increase has slowed down slightly, dropping to 35.6% for the second quarter of this year from 53.9% for the first quarter of this year. According to some estimates, the rate of growth will continue to decelerate for Q3, coming in at 33.8%.