Google (Alphabet) Q2 2022 Earnings Report Recap

GOOGL beat on earnings, missed on revenue

Key Takeaways

  • Google Cloud revenue fell short of analysts' expectations.
  • Google Cloud is one of Alphabet's primary business segments. It provides developers with a cloud platform for building, testing, and deploying applications.
  • Alphabet recently completed a 20-for-1 stock split.
Google (Alphabet) Earnings Results
Metric Beat/Miss/Match Reported Value Analysts' Prediction
EPS Beat $1.21 $1.14
Revenue Miss $69.7B $69.9B
Google Cloud Revenue Miss $6.3B  $6.4B

Source: Predictions based on analysts' consensus from Visible Alpha

Google (Alphabet) Financial Results: Analysis

Alphabet Inc. (GOOGLGOOG), parent company of Google, on July 26 reported Q2 FY 2022 earnings and revenue that were mixed relative to consensus estimates. Earnings per share (EPS) fell 11.0% year-over-year (YOY) but coming in ahead of analyst predictions. Google's revenue missed analyst estimates, while increasing by 12.6% compared with the year-ago quarter. Google Cloud revenue also missed analysts' expectations, coming in at $6.3 billion.

GOOGL Cloud Revenue

Google Cloud revenue grew 35.6% YOY, the slowest pace of growth in at least 17 quarters. It fell short of analyst predictions for the quarter. Google Cloud is one of the tech giant's primary business segments, the other being Google Services. The cloud segment provides developers with a highly scalable and reliable platform for building, testing, and deploying applications. It also offers workspace collaboration tools, including apps like Gmail, Docs, Drive, Calendar, Meet, and more.

As of the end of the fourth quarter of 2021, Google Cloud had an estimated 9% of the global cloud market, ranking it third behind Microsoft Corp.'s (MSFT) Azure and top-ranked Inc.'s (AMZN) Amazon Web Services.

GOOGL Outlook and Stock Performance

Alphabet did not provide forward guidance at the time of its earnings release.

GOOGL Conference Call Recap

In a conference call after results were released, Google Chief Executive (CEO) Sundar Pichai said the company is focusing on making readjustments in its operations. ”As a company, 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. “Moments like this give us a chance." Google said this month that it will slow hiring and reassess its staffing requirements.

Shares of GOOGL rose by about 2.6% in after-market trading hours immediately following the company's earnings release. Overall, Alphabet shares have underperformed the market in the last year, providing a 1-year trailing total return of -21.7% compared with -10.3% for the S&P 500 as of July 26.

Alphabet's next earnings report (for Q3 FY 2022) is expected to be released on Oct. 27, 2022.

Article Sources
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  2. Visible Alpha. "Financial Data."

  3. Alphabet Inc. "Form 10-K for the Fiscal Year Ended Dec. 31, 2021," Pages 6 & 7.

  4. Statista. "Cloud Infrastructure Services Vendor Market Share Worldwide From 4th Quarter 2017 to 4th Quarter 2021."

  5. The Wall Street Journal. "Google Sales Growth Slows as Pressures Mount on Ad Market."

  6. TradingView. "Price Chart: GOOGL and S&P 500."

  7. MarketScreener. "ALPHABET INC. (GOOGL)."

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