Alphabet (GOOG, GOOGL) reported second quarter earnings on Tuesday after the market close which beat estimates on the top and bottom lines, sending the stock up as much as 6% in after-hours trading.
The Google parent company reported revenue of $74.6 billion, beating expectations for $72.75 billion while reporting earnings per share of $1.44, more than the $1.32 expected by analysts.
Alphabet also announced its CFO Ruth Porat would take the newly created role of president and chief investment officer.
Google ad revenues totaled $58.14 billion in the quarter, better than the $57.5 billion expected and $56.3 billion reported in the same period last year. YouTube ad revenues also topped estimates, reaching $7.66 billion against forecasts for $7.41 billion. In the prior year period, YouTube ad revenue totaled $7.34 billion.
The company also reported another profit for its Google Cloud business, which first turned a profit in the first quarter of this year. Google Cloud revenues totaled $8 billion with income for the segment totaling $395 million, better than the $590 million loss for the segment reported in the same quarter last year.
Alphabet’s total operating income totaled $21.8 billion for the quarter.
“Our continued leadership in AI and our excellence in engineering and innovation are driving the next evolution of Search, and improving all our services,” Alphabet and Google CEO Sundar Pichai said in a statement. “With fifteen products that each serve half a billion people, and six that serve over two billion each, we have so many opportunities to deliver on our mission.”
The company’s Other Bets segment, which will fall under Porat’s purview in her new job, reported an operating loss of $813 million in the quarter, narrower than the $1.34 billion loss seen in the same period last year.
These across-the-board beats in ad and cloud revenue link back to Google’s cost-cutting efforts of this year and last, which most publicly involved Alphabet in January announcing plans to cut 12,000 employees.
“Our financial results reflect continued resilience in Search, with an acceleration of revenue growth in both Search and YouTube, as well as momentum in Cloud,” Porat said in a press release. “We continue investing for growth, while prioritizing our efforts to durably reengineer our cost base company-wide and create capacity to deliver sustainable value for the long term.”
Porat — who’s Google and Alphabet’s longest-tenured CFO to date – will start in her new role on Sept. 1, also retaining her role as CFO. Porat will continue reporting to Pichai.
“Ruth has worked to drive financial discipline and returns for shareholders, while spearheading investment to create sustainable, long-term value,” Pichai said.
AI, regulation, and Alphabet’s future
In Alphabet’s earnings call, look out for references to the company’s AI efforts — AI has been an overall tailwind in tech the last few months and one that’s especially and inextricably linked to Alphabet.
Since 2022, Alphabet has been entrenched in an AI standoff with Microsoft (MSFT), which relaunched its Bing search engine after doubling down on its investment in ChatGPT maker OpenAI. Though Google still has far and away more users than Bing, Microsoft has managed to get back in the game, facilitating questions from some analysts about Google’s ability to innovate.
Google co-founder Sergey Brin has reportedly become increasingly involved as Alphabet has looked to step up its AI game.
Further, Alphabet — and Big Tech at large — has also been in the crosshairs with regulators of late, and will likely address this in some capacity to analysts and investors on the call.
To be sure, the regulatory concerns have been piling up. The leading European Union regulator, the European Commission, is interested in breaking up Alphabet’s ad tech business. Alphabet is also in talks with EU regulators about setting up guardrails on AI. Additionally, in January, the US Department of Justice sued Google, alleging the company has a monopoly on online advertising.
Allie Garfinkle is a Senior Tech Reporter at Yahoo Finance. Follow her on Twitter at @agarfinks and on LinkedIn.
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