Shares of Alphabet Inc. edged up in Wednesday’s pre-market session despite weaker-than-expected earnings and revenue for the second quarter.
The American multinational technology company soared 4.87% or 5.11 points to $110.13 per share. This movement completely reversed the 2.32% drop on Tuesday’s regular trading.
Accordingly, Alphabet Inc. reported earnings of $1.21 per share, missing the $1.28 expected by analysts. At the same time, its revenue posted at $69.69 billion, lower than the market consensus of $69.90 billion. The firm slowed to 13.00% in the quarter from 62.00% a year earlier.
CFO Ruth Porat explained that currency fluctuations from a strengthening dollar knocked 3.70 percentage points off revenue growth. She also explained that the higher upturns of the dollar would hit next quarter’s result much harder.
Meanwhile, Alphabet Inc.’s advertising revenue rose just 12.00% to $56.30 billion. This upturn indicated that marketers reeled in their spending to manage inflationary pressures.
Subsequently, the most notable deceleration was in the YouTube division. It posted sales of $7.34 billion, below the $7.52 billion expected. In addition to the overall pullback in ad spending, the platform faces heightened competition from TikTok in short-form videos.
Likewise, Google Cloud revenue declined to $6.28 billion from the forecasted $6.41 billion expected. The division aims to take share from Amazon Web Services and Microsoft Azure, the top two players in the market.
Moreover, Alphabet Inc.’s traffic acquisition costs published $12.21 billion profit, below the anticipated $12.41 billion.
Alphabet Inc.’s headcount rose 21%
Alphabet Inc’s headcount edged up 21.00% to 174,014 full-time employees from 144,056 the year prior. Nevertheless, the firm stated last month that it would slow the pace of hiring and investments through 2023.
Additionally, CEO Sundar Pichai told employees in a memo that the business could bear the impact of the persisting economic headwinds. In line with this, the company expects those challenges to continue through the end of this year.
However, Alphabet Inc. did not provide a revenue forecast. Nevertheless, analysts expect growth for the year to rise by 14.00% to $293.90 billion. Meanwhile, its shares have lost about a quarter of their value this year.