Alphabet earnings meet expectations, but YouTube ad revenue misses

Google parent company letter Reported Second quarter results After the market closed on Tuesday, Alphabet reported revenue and profit in line with analyst expectations, but YouTube advertising revenue fell short of expectations. Alphabet shares rose about 2.5% on the news.

Here’s how the company performed compared with what analysts polled by the London Stock Exchange expected:

income: $1.89 per share vs. $1.84 per share expected

income: $84.74 billion, higher than the expected $84.19 billion

Here are other data points Wall Street is watching:

• YouTube advertising revenue: $8.66 billion vs. $8.93 billion, according to StreetAccount
• Google Cloud Revenue: $10.35 billion vs.. $10.2 billion, according to StreetAccount
• Traffic Acquisition Cost (TAC): $13.39 billion vs. $13.54 billion, according to StreetAccount

Alphabet’s revenue increased 14% year-on-year, mainly due to its search and cloud computing businesses. Quarterly revenue exceeded $10 billion for the first time and operating profit exceeded $1 billion for the first time.

The company reported $64.62 billion in advertising revenue, up from $58.14 billion last year, suggesting that Google’s advertising business is continuing to grow, albeit at a slower pace than in the first quarter, after rising inflation and interest rates tighten marketing budgets in 2022 and 2023.

Although YouTube’s ad revenue fell short of expectations, it still grew to $8.66 billion, compared with $7.66 billion in the same period last year. Although it is the world’s largest video platform, it faces fierce competition from social video sites such as TikTok.

Net income rose to $23.6 billion, or $1.89 per share, from $18.4 billion, or $1.44 per share, a year earlier.

The company’s “other investments” segment, which includes its self-driving car company Waymo, brought in $365 million in revenue, up from $285 million in the same period last year. In the second quarter, Alphabet made several expansion updates, including its self-driving car unit Waymo, which Opened The service will be available to all users in San Francisco. It is Waymo’s second citywide launch after its debut in the Phoenix metropolitan area in 2020.

Alphabet CEO Sundar Pichai said in the earnings report: “Our strong performance this quarter highlights the continued strength of our search business and the momentum of our cloud computing business. We are innovating at every layer of the AI ​​stack. As technology develops and we pursue the many opportunities of the future, our long-term infrastructure leadership and internal research team will prepare us well.”

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