Despite ad declines and a second straight quarter of declining earnings, Google stock climbs

 New: Despite ad declines and a second straight quarter of declining earnings, Google stock climbs

Despite ad declines and a second straight quarter of declining earnings, Google stock climbs

Ruth Porat, the chief financial officer at Google, stated that the business would not reduce its expenditures on datacenters, with servers constituting its largest capital outlay.


Google could be the most secure of the major online advertisers, but it doesn't mean much at the moment.


Google's overall advertising revenue increased from $50.4 billion to $56.3 billion in only one year. An increase from $35.8 billion to $40.7 billion was seen in search.


Although not as swiftly, YouTube ad sales increased from $7 billion to $7.34 billion in the previous year.


Google's Cloud revenue increased by 37% to $6.3 billion; Google Cloud is thought to be in third place in terms of cloud sales, behind rivals Amazon.com Inc. AMZN and Microsoft Corp. MSFT.


Google may have benefited from not providing financial forecasts, a strategy it has continued for years, as it has avoided the unrealistic expectations of Wall Street.


As marketers favor lower-funnel approaches, analyst Mitchell said, "Google is relatively well positioned to weather the choppy waters that lie ahead due to its huge market share in search advertising."


The price of Google has fallen by 27% so far this year. In 2022, the larger S&P 500 index SPX, -1.15 percent declines by 18%.

Travel advertising, according to Google's Chief Business Officer Phillip Schindler, is still difficult, and some advertisers have cut expenditure.

Profit fell 15.6% year over year in the quarter, following a drop of 8.3% in the first quarter; Google's last two consecutive quarters of declining profitability occurred in the first two quarters of 2015, with reductions of 2.3 and 1.8 percent. Alphabet's operational profit margin dropped from 31% in the prior quarter to 28% this quarter.


"Search and Cloud fueled our performance in the second quarter. Our long-term efforts in artificial intelligence and computing have helped to significantly increase the value of our services for customers and the efficiency of all types of enterprises. Alphabet CEO Sundar Pichai stated in a statement revealing the results, "We'll continue to properly invest in deep computer science for the long-term while we narrow our emphasis.


Pichai revisited his recent remarks that Google is keeping a close eye on spending as it and other Big Tech companies navigate a perilous course through inflation, supply chain and inventory constraints, the war in Ukraine, and fear of recession late Tuesday during a conference call broadcast on YouTube.

While not spectacular, the numbers may have calmed investors who were alarmed by disappointing quarterly results from two other ad-dependent businesses, Snap Inc. and Twitter Inc., last week. On Wednesday, Meta Platforms Inc. META, -4.50 percent, the parent company of Facebook, is expected to release second-quarter financial results.


According to Insider Intelligence analyst Evelyn Mitchell, "Google's profitability loss this quarter indicates it's not immune to the issues plaguing the digital advertising sector at large." While YouTube growth slowed to a crawl in the face of fierce competition from TikTok and other companies in the video-streaming industry, Google's search and cloud businesses once again boosted its overall performance. It would have been difficult for Google to beat its earnings [from last year], and the second half of the year will undoubtedly be challenging.


After deducting the costs associated with acquiring new users, Google's income increased to $57.5 billion from $51 billion in the same time last year. The total revenue increased 13% to $69.7 billion. According to FactSet's survey of analysts, net income would have been $1.27 per share on $57.6 billion in total revenue and $57.6 billion in ex-TAC revenue.

After the computing juggernaut released results that were somewhat below Wall Street expectations, Google shares rose more than 2% in extended trading on Tuesday.


However, the results constituted Google's first quarterly loss since 2015 and its second consecutive quarter of year-over-year earnings decreases.


The most powerful player in digital advertising, Alphabet GOOGL, -2.32 percent GOOG, -2.56 percent, reported net income of $16 billion, or $1.21 per share, in its fiscal second quarter, down from net income of $18.5 billion, or $1.36 per share, in the same quarter last year. [Google just performed a 20-for-one stock split; as a result, earlier results have been changed.]

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