Google Q2 Earnings 2022: Flat growth in Revenue and Profit, miss estimates

Alphabet reported its Q2 earnings on Tuesday. The revenue and earnings showed growth but were below analysts' expectations. The Alphabet shares have lost one-fourth of their value this year.

Key Highlights of Alphabet Q2 Results:

• Revenue Growth: $69.69 billion, up 13% YoY
• Profits: $19.45 billion, flat year-on-year
• TAC: $12.21 billion against $12.41 billion expected

Let us look at Alphabet's June quarter numbers in detail:

Alphabet Q2 Earnings 2022: Increase in revenue

 The revenue reported by Alphabet for Q2 was $69.69 billion, in line with the street estimate of $69.9 billion. The revenue growth in the June quarter was 13% compared to 62% a year earlier. The revenue from advertising came at $7.34 billion in Q2'22, lower than street estimates of $7.52 billion.

Alphabet Q2 Results: Segment Revenue

 The main revenue source for Alphabet is 'Search Engine' and its revenue stood at $40.69 billion. YouTube ad revenue for the June quarter came at $7.3 billion. The company’s cloud reported revenue growth of 35% to $6.28 billion against analysts' expectations of $6.41 billion. Advertising revenue increased to $56.3 billion, up 12%, as marketers reeled in their spending to manage inflationary pressures. 

Revenue in Alphabet’s Other Bets segment, which includes a self-driving car unit and some health-tech projects, and the company’s venture arms, rose by $1 million from the year-ago period to $193 million.

Google Quarterly Results: Profit remains flat

 Alphabet reported a marginal 0.4% increase in profit to $19.45 billion in Q2'22 from $19.36 billion in Q2'21. The Earning Per Share (EPS) was $1.21, as compared to the street estimate of $1.28.

Google Q2 Earnings 2022: Traffic Acquisition Costs (TAC)

 This metric is used to show how much the company pays other websites to acquire traffic. It came in higher than the street estimate of $12.41 billion at $12.21 billion. Google's traffic acquisition costs rose 11.76% YoY.

Alphabet Stock Split: 

The company executed a 20-for-one stock split with a record date of July 1, 2022, effected in the form of a one-time special stock dividend on each share of the company's Class A, Class B, and Class C stock on the 15th July 2022.

Alphabet Q2: Increase in the headcount 

Google said its headcount rose to 174,014 full-time employees from 144,056 the year prior, up 21%. In the last month, the company will slow the hiring pace and investments in 2023 as it is not immune to economic headwinds.

Alphabet Revenue forecast: 

The company did not provide a revenue forecast. However, analysts expect growth for the year of 14% to $293.9 billion.

Alphabet Share target price: 

As per 26 Wall Street analysts' estimates, the average price target is $144.45 with a high forecast of $205 and a low forecast of $113. The share is currently trading at $105.02 per share.