Google earnings signal company weathering slowdown better than expected
Alphabet only narrowly missed estimates for its quarterly revenue on Tuesday, a sign the tech giant may weather an industry-wide slowdown better than expected.
Alphabet reported second-quarter revenue of $69.69bn, 13% higher than same period a year ago and nearly in line with the average expectation of $69.88bn among investment researchers tracked by Refinitiv.
The news heartened Wall Street, with shares in the company up 3% after hours. The results gave investors hope that Alphabet’s search and advertising business might be able to withstand big countries potentially going into recession over the next year.
Google announced on 20 July it would implement a several-week hiring freeze, “to enable teams to prioritize their roles and hiring plans for the rest of the year”. The move was widely interpreted as a worrying sign, not only for Alphabet but also the wider industry, as tech giants’ behavior is often seen as an economic bellwether.
In light of these changes, analysts had braced themselves for negative results, as rising inflation has influenced ad buyers to spend less on marketing. Alphabet, like others in the tech space, has struggled to maintain the huge growth it saw during the pandemic when much of life moved online.
Fears were bolstered by recent difficult earnings reports from tech firms including Snap, Twitter and Netflix – many of which are also stopping or slowing hiring.
Overall profit was $16bn, or $1.21 per share, compared with the average estimate of $1.29 per share. Alphabet’s profit tends to be unpredictable due to sporadic gains or losses – at least on paper – in the stakes it holds in many startups.
Still, within the $602bn global online ad industry, Google is expected to maintain market share of 29%, or the
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