Google Earnings Miss Expectations Amid Tech Industry Weakness

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parent Alphabet posted weaker-than-expected second-qu. The company reported $1.21 in earnings per share, missing the $1.31 forecast.

The weak results come as advertising, the company’s revenue driver, faces headwinds from a slowing economy. Google’s advertising business didn’t seem to suffer as badly as smaller internet companies but still faces a difficult environment. The tech giant’s advertising revenue grew 12% year over year to $56.3 billion, a much slower rate than the recorded a year earlier when advertisers rushed to meet consumers online during the height of the pandemic.

CFO Ruth Porat said 2021’s strong numbers made for technohunger difficult comparisons this year. 

« The very strong revenue performance last year continues to create tough comps, » she said on a call with analysts. Porat added that year-on-year growth rates were likely to slow for the rest of the year.

The company also battled a surging dollar, which eats into the value of revenue from overseas markets. Alphabet said the strong dollar trimmed 3.7% from year over year revenue growth. 

Google Cloud revenue increased about 36% year over year to $6.3 billion. But the division is still unprofitable with losses widening a little bit more than 45% to $858 million. Google is the third largest cloud provider, with about , according to Statista. 

The size of Alphabet’s staff grew to 174,000 employees, up from 144,000 a year earlier, a rise that’s unlikely to continue. CEO Sundar Pichai has already said the company is going to . 

« When you’re in growth mode, it’s tough to always take the time to do all the readjustments you need to do, » Pichai said. 

The company also battled a surging dollar, which eats into the value of revenue from overseas markets. Alphabet said the strong dollar trimmed 3.7% from year over year revenue growth. 

Google’s weaker-than-expected results are mild. Company executives were optimistic when speaking with analysts saying that advertising continues to innovate with more partnerships. 

« As ad sales slow for many companies, Google has consistently pulled in positive ad revenue by shifting its focus toward areas where the company can be sharper, » said Scott Sullivan, chief revenue officer at Adswerve, an online marketing and data analytics company. Google’s consumer data, along with retailer partnerships, can help it better brace for an e-commerce slowdown, Sullivan said.

Google’s stock rose more than 5% in after-hours trading to $110.50. Google executed a 20-for-1 stock split earlier this year.

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