Google posts slowest revenue growth in two years

After experiencing crazy growth during the pandemic, the tech giants are marking time. The announcements by Meta and Apple of the slowdown in the pace of their hiring already hinted at the end of the euphoria. This is confirmed with the publication of the quarterly results of Alphabet, which does not escape the phenomenon. Between April and June 2022, Google’s parent company saw its revenue increase by 13% year on year, to $69.7 billion.

This is the weakest progression of the American giant since the second quarter of 2020, when advertisers had stopped their advertising investments due to the meteoric spread of Covid-19. Some time later, Google had largely capitalized on this particular period, in particular by presenting itself as an essential ally of merchants and SMEs to accelerate their digital transformation and thus relaunch themselves. The Californian firm had also been able to rely on its cloud branch and its various services (YouTube, Gmail, Google Meet, etc.) to take full advantage of telework and the entertainment needs of millions of people induced by repeated confinements around the world. .

But two years later, things have changed and not all consumers have necessarily maintained their habits taken during the pandemic, which is shaking the technology market somewhat. However, the latter is mainly shaken by the war in Ukraine, the long-lasting shortage of electronic components, galloping inflation on a global scale, or even by the increase in interest rates decided by the Fed and the ECB. . In addition to revenues, this difficult economic climate is also felt on the group’s net profit, which amounted to 16 billion dollars in the second quarter, against 18.5 billion a year earlier.

Google still strong in advertising

However, Google delivered performance slightly above analysts’ expectations, which did not fail to reassure the markets. Moreover, the American giant has not been sanctioned on Wall Street, as Snap could have been last week when it announced its quarterly results. The Mountain View company has shown itself to be solid in terms of its advertising revenues, which constitute the heart of its economic model. These reached 56.3 billion dollars in the second quarter, against 50.4 billion over the same period last.

The group’s advertising turnover is even higher than that of the first quarter, which was established at 54.7 billion dollars. What compensate for the timid growth of advertising on YouTube, which generated 7.3 billion dollars between April and June 2022, against 7 billion a year earlier. Google’s video platform is indeed increasingly shaken up by TikTok, which continues to gain power in advertising. Over the whole of 2020, Google is expected to amass nearly $175 billion in net advertising revenue, or 29% of the global digital advertising market, according to Insider Intelligence.

Google Cloud, a very costly priority for the future

In addition to an advertising component on which Google has resisted well, the American giant can also count on a booming cloud division. In the second quarter, Google Cloud indeed posted a turnover of 6.3 billion dollars, up 36% year on year. But to compete with industry leaders Amazon Web Services and Microsoft Azure, Google’s cloud arm has widened its losses in a year, dropping $858 million over three years, up from $591 million in the same period of 2021. Google Cloud, which opened its France region a few weeks ago, had already lost $931 million in the first quarter of 2022.

Admittedly, the rise in the cloud is very expensive, but it should pay off big in the future. It is with this in mind that Sundar Pichai, the boss of Google, has made it a priority for the next few years, along with artificial intelligence and research. Priorities which should not suffer too much from the slowdown in hiring decided by the group for the rest of the year, in order to cope with a “uncertain global economic situation”. To date, Google has more than 174,000 employees in its ranks.