Alphabet is set to report Q2 earnings after the bell

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  • Alphabet shares have lost over a quarter of their value this year, stumbling alongside the rest of the tech sector.
  • Revenue growth is declining as the pandemic bump comes to an end and advertisers pull back on spending.
  • Google’s ad business has so far weathered the downturn better than Facebook, which reports results on Wednesday.

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Alphabet will report second-quarter earnings after the bell Tuesday.

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Here’s what Wall Street is expecting:

  • Earnings per share (EPS): $1.28, according to Refinitiv
  • Revenue: $69.9 billion, according to Refinitiv
  • YouTube advertising revenue: $7.52 billion, according to StreetAccount
  • Google Cloud revenue: $6.41 billion, according to StreetAccount
  • Traffic acquisition costs (TAC): $12.41 billion expected, according to StreetAccount

Alphabet is expected to report a slowing of revenue growth to 13% from 62% a year earlier, when the company was pulling out of the pandemic and the economy was flourishing.

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Recently, analysts have lowered their estimates for second-quarter earnings to account for broad economic challenges now facing advertisers.

Google said last month it will slow the pace of hiring and investments through 2023, and CEO Sundar Pichai told employees in a memo, “we’re not immune to economic headwinds.”

“We need to be more entrepreneurial working with greater urgency, sharper focus, and more hunger than we’ve shown on sunnier days,” Pichai wrote.

Also during the quarter, Google said it would be raising pay and overhauling its performance evaluation system for full-time employees as the company tries to ease tension between employees and leadership.

Alphabet finance chief Ruth Porat warned Wall Street in April that the company may be in for another rough quarter after missing analysts’ expectations on the top and bottom lines for the first period. She cited the Russia-Ukraine war, tough comparisons from the prior year’s growth and competition from rivals like TikTok.

Snap soured the mood for ad-tech last week, when the social media company reported disappointing results on the top and bottom line and said “forward-looking visibility remains incredibly challenging.” The stock plunged 39% and pulled down other ad-tech stocks. Facebook parent Meta, which is set to report results on Wednesday, dropped more than 7%.

There’s also potential regulatory action from lawmakers related to Google’s dominant search business. The Wall Street Journal recently reported that a new antitrust lawsuit over Google’s ad-tech business could come as soon as this summer. And Google faces lawsuits from coalitions of state attorneys in general tied to concerns around privacy and monopoly control.

WATCH: With the recession looming, ad spending is going to come down

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