Concerns over a slowdown in the economy and rising inflation have hit online advertising, and Google could settle in a period of slower growth.
Google’s parent company Alphabet reported on Tuesday that second-quarter net income was down 14% year-on-year to $ 16 billion and revenue was up 13% to $ 69.7 billion. According to data compiled by FactSet, revenue was below $ 17.5 billion in revenue, compared to analysts’ estimated revenue of $ 67.9 billion.
Even with the economic cushion of popular products, Google has to fight the many uncertainties that have rocked the global market in recent months. This includes slowing economic growth and rising inflation in the United States and other major economies, which impact advertising budgets and consumer behavior. Both are important to Google’s business. The company must also overcome the effects of a sustained pandemic and Russia’s invasion of Ukraine.
Alphabet, known for its rapid talent expansion, is paying attention to responding to the macroeconomic environment by delaying hiring and prioritizing the roles it needs for the rest of the year.
Alphabet share rose 2% in overtime trading.
Alphabet Chief Financial Officer Ruth Porat warned that growth could appear slower due to the disadvantages of the second quarter comparison. Last spring, financial results signaled a recovery compared to the early days of a pandemic where advertisers were fooled. The most recent quarter also reflects the company’s decision to suspend operations in Russia due to the war. In 2021, Russia contributed 1% to Google’s total revenue.
Despite the slowdown, the company’s search engine remains an important gateway to the Internet and can sell billions of ads as long as people continue to use the service. Owning YouTube, the most popular destination for online video, its advertising revenue increased 5% to $ 7.3 billion in the three months to June 30.
The company’s search ads increased by 13.5%, proving to be more resilient than YouTube, which Google said was affected by changes in Apple’s app privacy.
According to Alphabet, it currently employs 174,014 employees, an increase of more than 10,000 from the figures reported in April. Like many of its peers, the company has since said it will delay hiring due to weakening economic conditions.
Google’s cloud computing unit lost $ 858 million in the second quarter, but revenue increased 36%. A year ago, the division posted a loss of $ 591 million. This unit is still lagging behind its competitors in Amazon and Microsoft.
