Google parent Alphabet is slated to report its second-quarter 2022 results after the market close on Tuesday, July 26.
Previous Quarter Review
Google’s Q1 revenue is up 23% from $55.3 billion, with operating income at $20.09 billion and net income of $16.44 billion for this quarter (versus $17.93 billion a year ago).
YouTube ad revenue was $6.87 billion (versus $6 billion a year ago), while Cloud reported $5.82 billion (compared to $4.05 billion in Q1 2021).
Stock Split
Alphabet's stock split reduced its price per share from $2,235.55 to $111.77 at the start of trading on July 18.
The split adds no real value to the company, but it does change the way earnings are calculated.
Alphabet is an incredibly strong company and is a great value right now.
Earlier this year, Alphabet announced plans to conduct a 20-for-1 stock split. It officially took effect at the market close on Friday, and Monday is the first day of trading with its new, shrunken share price.
When a company creates a lot of value over the long term, its share price typically generates high returns. In Alphabet's case, its stock had risen to $2,235.55, which made it a little expensive for investors who were only investing small amounts of money.
Halt Hiring
Google reportedly announced a hiring pause on July 20, stating it will stop hiring for two weeks, not long after announcing it would slow the pace of hiring.
Last week the company said it would be reducing the pace of hiring for the rest of the year. However, according to an article from The Information, they have decided to implement a pause.
Analyst Opinions
Credit Suisse analyst Stephen Ju sees a profit of $5.72 a share in calendar 2022, and $6.31 next year, down from his previous forecast of $5.92 this year and $7.10 next year. Ju cuts his target on Alphabet shares to $143, from $170.
“We decrease our forecasts for Google’s advertising businesses as we receive marketer feedback of declining budgets owing to macro uncertainty,” Ju writes. “While the extent of ad revenue compression for Q3 2022 and beyond remains unknown, it is clear marketers are showing signs of defensive behavior.”
But he notes that some ad dollars are shifting to Google search as advertisers seek higher return on investment.
Cowen analyst John Blackledge cut his Alphabet target to $3,000, from $3,200. He said that search advertising continues to see healthy demand, but that the numbers will come against “historically tough” comparisons. He said he sees some impact on the company’s YouTube unit from increased competition from TikTok.
Blackledge said his same agency source reported 18% year over year growth in spending on Google search ads, which is better than Meta’s situation, but slower than the 23% growth reported in the first quarter. He is now forecasting revenue growth for “search and other” advertising of 14.5% in the quarter, down from 16% previously.
Consensus Estimate
This internet search leader is expected to post quarterly earnings of $1.30 per share in its upcoming report, which represents a year-over-year change of -95.2%.
Revenues are expected to be $58.1 billion, up 14% from the year-ago quarter.
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