Alphabet's Revenue Growth Slows

Google parent company Alphabet announced second-quarter revenue of $69.7 billion, up 13% from the same period last year, but missing estimates of $70.8 billion—and marking the slowest quarterly growth in two years. Of its total revenue, $56.28 billion was generated by advertising. However, YouTube saw only a 5% increase in sales of $7.34 billion, which fell short of expectations. Revenues grew by 23% in the first-quarter and by 41% in the prior quarter. Google is not immune to the industry headwinds facing the online ad market, with execs pointing to economic uncertainty on the investor call. Yet the dominant tech company is more able to weather the storm than smaller tech platforms. Both Twitter and Snap reported underwhelming earnings last week. YouTube, however, is increasingly competing for ad dollars from rivals like TikTok. And the tech giant is facing multiple lawsuits and regulatory heat, particularly around its ad-tech business. The company attributed a slowdown in buyer demand to a number of factors, including lower engagement levels compared with earlier stages of the pandemic. After a strong 2021 driven by consumer demand—partly spurred by people working from home—Alphabet and Google CFO Ruth Porat said those gains created "tough comps that will weigh on year-on-year growth rates of advertising revenues for the remainder of the year.” In the third quarter, the company expects ongoing headwinds, citing widespread supply chain issues and inventory problems that have resulted in companies spending less on advertising. Upcoming service fee changes and a continued slowdown in buyer spend will also impact its bottom line. “Google's earnings miss this quarter proves it's not immune to the challenges facing the digital advertising industry at large,” said Evelyn Mitchell, analyst at Insider Intelligence. “It would have been tough to outperform its Q2 2021 earnings, but it's clear Google has its work cut out for it in the back half of the year.” Google Debuts Tool for Ad Buyers, Publishers to Confirm That No Additional Fees Were Taken Google Search and other advertising revenues were up by 14% at $40.7 billion, which executives on the call attributed to searches for travel and retail. Advertising revenue at the tech giant rose by 9% to $8.3 billion, driven primarily by its AdSense service. Its cloud division surpassed a $6 billion quarterly revenue mark for the first time. The company executives pointed to cloud services and artificial intelligence as areas for growth.

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Alphabet's Revenue Growth Slows While Advertisers Pull Back on YouTube

The tech giant’s second-quarter ad revenue totaled $56.28 billion

Trishla Ostwal

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Trishla Ostwal