Google revenue

Google’s revenue growth slowest in 2 years, adding to recession fears

SAN FRANCISCO (AP) — Google’s revenue growth in the past quarter slowed to its slowest pace in two years as advertisers limited spending amid growing fears of an economic recession.

The regression reported by Google’s parent company Alphabet on Tuesday is the latest sign that the tailwinds propelling big tech companies during the pandemic have shifted. The array of new challenges facing the industry has already sent the Nasdaq tech-focused composite index down 26% so far this year.

In the case of Alphabet, revenues from April to June totaled $69.7 billion, an increase of 13% over the same period last year.

That would be impressive growth for most companies outside of technology. But it marked Alphabet’s lowest growth rate since the April-June 2020 quarter, when the company suffered the first, and so far only, year-on-year revenue decline. another in his story. The cause: Advertisers pulled back while most consumers were locked up at home at the start of the pandemic.

The slower spending was particularly evident on YouTube, where major advertisers in recent years have increasingly shifted to promoting their brands with short ads. YouTube ad revenue rose 5% year over year in the second quarter, the lowest year-over-year quarterly growth rate since Alphabet began disclosing financial results from the video site at the end of 2019.

Despite the slowdown, Alphabet remains extremely profitable. The Mountain View, Calif., company earned $16 billion, or $1.21 per share, in the second quarter — though that’s down 14% from a year ago. As usual, most of this money comes from Google’s dominant search engine and a wide range of other popular services, including its Maps, Gmail, Chrome browser, YouTube video site and Android software for smartphones.

Even though revenue and profit were slightly lower than analysts’ estimates, the numbers apparently weren’t as bad as investors feared. Alphabet’s plummeting share price gained 3% in extended trading after the figures were released.

The results suggest digital advertisers remain cautious as the Federal Reserve considers more aggressive action – that is, higher interest rates – to bring down the highest inflation in more than 40 years, a mission that threatens to drag the economy into a recession. The next rate hike is expected on Wednesday.

Tightening advertising budgets have implications beyond Google. It pressed social platform Snap so harshly that its profits dipped below management’s warnings of poor business results, creating such a murky outlook that its executives declined to make a forecast for the current quarter.

Facebook’s parent company, Meta, is also preparing for tougher times ahead. Meta CEO Mark Zuckerberg is expected to elaborate on his views on the current state of digital advertising on Wednesday when the company is expected to release its second quarter results.

Besides the current economic certainty, Snap and Facebook have been harmed by the privacy protections Apple imposed last year to prevent social media services and a wide variety of other apps from tracking interests and people’s locations on iPhones to help sell ads without users’ permission. This protection hasn’t affected Google as much because its search engine can learn a lot about people from their queries.

Even so, Google appears to be preparing for a potential recession. Its management recently signaled its concern by announcing plans to slow down hiring, then went even further by imposing a two-week freeze on extending job offers to candidates.

But ahead of that break, Alphabet significantly bolstered its payroll in the quarter. It added more than 10,000 employees from late March to June, compared to an increase of around 7,400 workers in the first three months of the year. The company ended the quarter with approximately 174,000 employees worldwide.