Google’s Q1 Earnings Are In – But What Was The Miss?

Google posted 23% year-over-year revenue growth in its Q1 2022 financial results, surpassing the $68 billion mark in total revenue.

This is significantly higher than the $55.3 billion reported in Q1 2021, but a significant drop from the reported 34% growth rate at a time when consumer informational needs were at their peak due to the pandemic.

Just ahead of its quarterly earnings call, parent company Alphabet distributed a media release that cited “strong growth in search and the cloud” as key drivers.

Alphabet and Google CFO Ruth Porat said in the release that Google “continues to consider investments in capex, R&D and talent to support long-term value creation for all stakeholders.”

YouTube’s Revenue Growth Falls Short

YouTube brought in $6.87 billion in revenue, as Bloomberg’s Mark Bergen reported, more than $500 million below analyst expectations.

Porat explained that the decreased growth rate in YouTube revenue could be attributed to the “lack of exceptional performance of direct response, which he called the first quarter of 2021.”

Nevertheless, Alphabet and Google CEO Sundar Pichai shared that YouTube now boasts over 2 billion monthly signed-in users.

He also confirmed that the time spent on YouTube continues to increase, even as people have returned to personal activities.

Pichai said YouTube Shorts is a key growth driver that now garners more than 30 billion daily views, four times more than a year ago.

However, while short views are counted in the total watch time of the channel, they don’t help creators Become eligible for monetization through the YouTube Partner Program (YPP).

Monetization is a focus YouTube will continue to work on over time, Pichai promised.

According to Chief Business Officer Philip Schindler, YouTube is also currently testing app installs and video action campaign ad formats.

Google Invests in US, London, Warsaw and Nairobi

To help support its flexible work plans, Pichai announced that Google plans to invest $9.9 million in US data centers and offices this year, creating 12,000 new Google jobs.

New office investments are also coming up in London and Warsaw, as well as new product development facilities in Nairobi.

Cloud, AI, YouTube and search were the priorities last year, and in 2021, Google spent more than $40 billion in R&D in the US alone.

More Major Highlights

Google reported:

  • $18.3 billion, up 24%, with headcount growth accounting for the biggest increase.
  • $20.2 billion in operating income.
  • Free cash flow of $69 billion for the past 12 months.
  • $52 billion in Class A and Class C shares were repurchased in the past 12 months.
  • The substantial increase in YouTube subscription revenue was offset by the Play results.

Porat said Google search and advertising revenue grew $39.6 billion, up 24% due to a steady recovery in retail and travel.

Featured Image: Shutterstock/zen0606

Alphabet Q1 2022 Earnings Call Webcastyoutube
Alphabet announces first quarter 2022 resultsAlphabet Investor Relations

Source link

Leave a Comment