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Alphabet (GOOGL) Q3 2022 Results

Sundar Pichai speaks onstage during day one of Vox Media’s Code 2022 conference in Beverly Hills, CA.

Jerod Harris | Getty Images Entertainment | Getty Images

Alphabet releases its third-quarter results Tuesday after the bell.

Here’s what Wall Street expects.

  • Earnings per share (EPS): $1.25, according to Refinitiv estimates.
  • Revenue: $70.59 billion, according to Refinitiv estimates.
  • YouTube ad revenue: $7.42 billion, according to StreetAccount estimates.
  • Google Cloud revenue: $6.69 billion, according to StreetAccount estimates
  • Traffic Acquisition Costs (TAC): $12.38 billion, according to StreetAccount estimates

As fears of a recession intensify, companies are taking a more cautious approach with their advertising budgets. For Google’s parent Alphabet, which relies heavily on digital ads, this has resulted in lower growth estimates.

The company is expected to report revenue growth of around 8% for the third quarter. Apart from a period at the start of the Covid pandemic, that would mark the weakest expansion of any quarter since 2013. The slowdown is particularly acute at YouTube, which is expected to see growth of around 3%, according to StreetAccount. YouTube is experiencing increased competition from short video app TikTok.

During the quarter, CEO Sundar Pichai enacted cost-cutting measures across the company, citing economic challenges including a potential recession, soaring inflation, rising interest rates and subdued advertising spending. . In September, Pichai said he wanted to make the company 20% more efficient, which could include job cuts and product reductions.

Google recently canceled the next generation of its Pixelbook laptop and cut funding for its internal Area 120 incubator. And last month, Google announced it would shut down its Stadia digital gaming service. Also in the quarter, the company said it would delay plans to replace third-party cookies for advertising until 2024 after finding the transition more difficult.

In a spirited show of hands, staff members confronted executives over planned cuts to travel and entertainment budgets. Pichai responded by reminding employees that there was a time when Google was “small and rambling” and that they “shouldn’t always equate fun with money.”

Bringing employees back to the office continues to be a challenge for Google, after employees grew accustomed to flexibility during the pandemic when profits hit an all-time high. Adding to the tension, employees told CNBC during the quarter that they were receiving regular notifications from management of Covid-19 infections, leading some to question the company’s back-to-work mandates. company.

Alphabet shares have fallen 29% this year, performing roughly in line with the Nasdaq.

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