Digital ads help drive up revenue of Google-owner Alphabet
Advertising sales, Alphabet's chief revenue source, rose 11% to $64.6bn. The company sells ads in its search product using customer data to better target them.
Google owner Alphabet beat second-quarter revenue estimates on Tuesday, driven by a rise in digital advertising sales and healthy demand for its cloud computing services. Its shares were barely changed in after-market trading, after rising over 30% this year.
Advertising sales, Alphabet’s chief revenue source, rose 11% to $64.6bn (€59.5bn). The company sells ads in its search product using customer data to better target them.
Revenue grew 14% to $84.74bn from April to June, against analysts’ consensus estimate of $84.19bn, according to LSEG data.
Revenue from cloud computing services, a widely watched barometer for the health of enterprise technology spending, grew 28.8% to $10.35bn.
Analysts had expected $10.16bn.
Meanwhile, cybersecurity startup Wiz has turned down a takeover bid of up to bn from Google, sticking instead with a plan for an initial public offering. The rejection will come as a blow to Google, which is trying to catch up with Microsoft and Amazon in an intensely competitive cloud services market.
Google, which bought cybersecurity firm Mandiant for $5.4bn just two years ago in its second-largest acquisition, could have used Wiz to round out its security offerings. The New York-based startup connects to cloud storage providers such as Amazon Web Services and Microsoft Azure, and scans data stored there for security risks.
An acquisition target as large as Wiz would have been unusual for a big tech company such as Alphabet, and Google already faces several challenges from regulators. Those include a lawsuit by the US Justice Department accusing it of abusing its dominant position in search, and another one regarding its digital advertising tools.
Google also held talks to acquire customer relationship management firm HubSpot before walking away from it earlier this month. The deal would have turned Alphabet into a rival of Salesforce, Oracle and others in that market.
Sales for the company’s ‘other bets’, including experimental projects and its self-driving car unit Waymo, rose 28% to $365m.
Ad sales in its YouTube division rose 13% to $8.67bn.
Elsewhere, Spotify, the Swedish audio-streaming giant, reported second-quarter subscriber growth that exceeded analysts’ projections after rolling out price increases.
Paid subscribers grew 12% year over year to 246m, the company said on Tuesday, beating the 245.2m average of analysts’ estimates compiled by Bloomberg. Shares in the company rose up to 15% before the market opened in New York on Tuesday.
Spotify has significantly pared costs over the last year to boost profitability, reducing its workforce and pulling back on podcast production. It also shook up its approach to content and pricing, rolling out price hikes, planning new subscription tiers and introducing audiobooks at the end of 2023. It forecast 639m active users for the current quarter, lower than forecasts of 650.45m. Paid subscribers are projected to be 251m, in line with estimates.
Total active users rose 14% to 626m in the second quarter, compared with Bloomberg’s average estimates of 631.5m.
Revenue grew to €3.8bn for the period, in line with analysts’ expectations.
Earnings per share came to €1.33, compared with estimates of €1.04.
- Reuters and Bloomberg
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