Alphabet Hits Revenue Goals But Fails to Match YouTube Ad Revenue

Google parent company Alphabet reported its second-quarter results after the market closed on Tuesday, meeting analysts’ expectations for revenue and profit but falling short on YouTube advertising revenue.

Following the announcement, Alphabet shares rose about 1% in after-hours trading.

Here’s how the company performed against analyst estimates reviewed by LSEG:

Earnings: $1.89 per share vs. $1.84 per share expected
Revenue: $84.74 billion vs. $84.19 billion expected
Additional key figures tracked by Wall Street:

YouTube Ad Revenue: $8.66 Billion vs. $8.93 Billion, According to StreetAccount
Google Cloud Revenue: $10.35 Billion vs. $10.20 Billion, StreetAccount
Traffic Acquisition Cost (TAC): $13.39 billion vs. $13.54 billion according to StreetAccount
Alphabet’s revenue rose 14% year over year, driven by both search and cloud, which surpassed $10 billion in quarterly revenue and $1 billion in operating profit for the first time.

The company reported $64.62 billion in advertising revenue, up from $58.14 billion a year earlier, indicating that Google’s advertising business continues to grow, albeit at a slower pace than in the first quarter, as rising inflation and interest rates impact marketing budgets in 2022 and 2023.

Although YouTube’s advertising revenue missed estimates, it still grew to $8.66 billion from $7.66 billion in the year-ago quarter. Despite being the world’s largest video platform, YouTube faces growing competition from social video sites like TikTok.

Net income increased to $23.6 billion, or $1.89 a share, from $18.4 billion, or $1.44 a share, in the year-ago quarter.

The company’s “Other Bets” unit, which includes its self-driving car company Waymo, brought in $365 million, up from $285 million a year ago. Alphabet CFO Ruth Porat announced on the company’s earnings conference call that they are committing to a new $5 billion, multi-year investment in Waymo.

Alphabet saw several expansion updates in the second quarter, including its self-driving car unit Waymo, which opened its service to all users in San Francisco. This was Waymo’s second launch in the city, following its debut in the Phoenix metro area in 2020.

During the company’s earnings conference call, CEO Sundar Pichai said that Waymo currently operates 50,000 paid rides per week on public transit, primarily in San Francisco and Phoenix.

“Our strong performance this quarter highlights our continued strength in research and momentum in the cloud,” Pichai said in the earnings release. “We are innovating at every level of the AI ​​stack. Our long-standing infrastructure leadership and internal research teams position us well as the technology evolves and as we pursue the many opportunities ahead.”