Google reports slow growth in Q2 2022 earnings as the company braces for an economic downturn
It's been a rough year for tech stocks, and Google is no exception. Just a couple of days before the Pixel 6a is set to hit store shelves, Alphabet — Google's parent company — has announced its Q2 2022 earnings. Despite a massive slowdown in growth, Google reported revenue of nearly USD70 billion, up 13% year-over-year and marking a small jump over last quarter's earnings.
These numbers might sound impressive, but it's important to put it into perspective. Last year, Q2 2021 marked a 62% year-over-year increase compared to 2020, making this year's 13% leap look puny in comparison. Still, it's enough for stock to rise in after-market trading, demonstrating just how cloudy the overall outlook on tech stocks has been throughout the year. Thanks partly to low expectations, Alphabet outperformed analyst estimates, even as growth continues to slow for the second quarter in a row.
Once again, Search and Cloud continued to drive the company's bottom line, with Search revenue hitting USD40 billion and Cloud bringing in USD6.2 billion — a 35% increase over Q2 2021. Google's advertising branch reported USD56 billion, with USD7.3 billion coming from YouTube alone. Unfortunately, the company's Other Bets section continued to lose money, bringing in USD193 million while marking a USD1.7 billion loss. Overall, the company reported an operating income of USD19 billion and a net income of USD16 billion — down from USD18.5 billion this time last year.
Both in its press release and on today's earnings call, CEO Sundar Pichai stressed the importance of the company's investments in AI computing. Pichai also teased future augmented reality gadgets, including the glasses teased at I/O and the prototypes Google recently confirmed had entered public testing. In his closing remarks, he noted he was pleased to see employees back in the office despite the rocky state of the economy — though those return-to-office policies have proved controversial in recent months.
This report follows the company's stock split earlier this month, which Alphabet had initially announced at the beginning of this year. Overall, the company's stock price is down 27% since the start of 2022. Outside of earnings, Google continues to brace for expected hard times; the company recently announced it would implement a hiring freeze as it reviews open positions based on priority. In today's call, CFO Ruth Porat expounded on this, saying the company's actions on hiring will be more apparent in 2023.
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