Sales from Google’s core advertising business hit $56 billion during the three months ended June 30, the company reported Tuesday. That marks an increase of 11.6% year-over-year, but it’s a significant slowdown in growth rate from the same quarter last year, during which it posted a nearly 69% increase in ad revenue as it benefited from a pandemic boom in online advertising.
Google also narrowly missed Wall Street analysts’ expectations for both sales and profits during the quarter. The company posted revenues of $69.7 billion during the quarter, an increase of 13% from the prior-year quarter, compared to the $69.9 billion analysts had projected. Net income for the quarter fell more than 13% year-over-year to $16 billion, missing Wall Street estimates of $17.3 billion.
During a call with Wall Street analysts Tuesday, Alphabet CFO Ruth Porat pointed to “pullbacks in spend by some advertisers,” including due to economic uncertainty and “lower engagement levels” with its products compared to during the pandemic.
“We are focused on hiring engineering, technical and other critical roles … and we are working to increase productivity,” Alphabet CEO Sundar Pichai said on Tuesday’s call.
“It’s a privilege to build technologies that are helpful in good times, and in uncertain ones,” Pichai added.
A bright spot from Google’s earnings was a nearly 36% year-over-year revenue increase from its cloud computing segment.
“Whilst advertising spends will go up and down on economic cycles, the overall shift to Cloud computing as the backbone for all digital business — advertising, marketing and sales — is long term,” Tom Johnson, global chief digital officer at media agency Mindshare Worldwide, said in an investor note following Google’s earnings report.
