Google parent Alphabet smashed its way into the record books last year after clocking an annual revenue of $257 billion, which was a year-over-year increase of 41%. It could not make much of an encore when it came to earnings in the first quarter of 2022 however, as it missed estimates when it came to EPS and revenue for Q1 2022.
For the first three months of the year, Google’s parent company clocked $68.01 billion in revenue, which failed to beat the estimated $68.11 billion. It is however, an increase of 23% from the $55.31 billion it had pocketed in revenue in Q1 2021. Its diluted EPS (earnings per share) came at $24.62 per share, which is lesser than the expected $25.91 per share.
The operating income and operating margin for the same period came at $20.09 billion and 30% respectively, while net income came at $16.4 billion (lesser than the $17.9 in Q1 2021).
Here’s a snapshot from Q1 2022 earnings:
- Revenue: $68.01 billion, vs. $68.11 billion expected, according to Refinitiv
- Earnings per share (EPS): $24.62 per share, vs. $25.91 expected, according to Refinitiv
- YouTube advertising revenue: $6.87 billion vs. $7.51 billion expected, according to StreetAccount
- Traffic acquisition costs (TAC): $11.99 billion vs. $11.69 billion expected, according to StreetAccount
- Google Cloud revenue: $5.82 billion vs. $5.76 billion expected, according to StreetAccount
“We are pleased with Q1 revenue growth of 23% year over year. We continue to make considered investments in Capex, R&D, and talent to support long-term value creation for all stakeholders,” said Ruth Porat, CFO of Alphabet and Google.
Delving deeper into the statistics, we find that revenue from advertising from YouTube came at $6.87 billion, which fell short of analyst expectations of $7.51 billion. This does not come as a surprising development, especially since TikTok clocked strong growth in the same period to emerge as the top app in terms of worldwide downloads in Q1 2022 (since the start of the year, it has been downloaded over 175 million times on both the App Store and the Play Store). YouTube’s TikTok competitor, Shorts, had 30 million daily views in the quarter.
Total revenue from advertising in the quarter came at $54.66 billion (an increase from $44.68 billion in the same quarter last year). Its advertising revenue from Google Network and Google Search and other categories came at $8.1 billion and $39.6 billion respectively. The number of Alphabet employees also grew to 163, 906.
Google Cloud clocked $5.82 billion in revenue, beating the estimate of $5.76 billion and growing by 44%. It includes Google’s infrastructure and platform services, collaboration tools, and other services for enterprise customers and generated revenues from fees received for Google Cloud Platform services, Google Workspace collaboration tools, and other enterprise services. However, it still clocked $931 million in operating loss.
“Q1 saw strong growth in Search and Cloud, in particular, which are both helping people and businesses as the digital transformation continues. We’ll keep investing in great products and services, and creating opportunities for partners and local communities around the world,” said Sundar Pichai, CEO of Alphabet and Google.
The Other Bets segment nearly doubled its revenue to $440 million, while its operating loss increased to $1.15 billion. Revenue from Google Services increased to $61.47 billion for the quarter, while its operating loss came at $22.9 billion. Google Services includes products and services such as ads, Android, Chrome, hardware, Google Maps, Google Play, Search, and YouTube.
