Parent Google on Tuesday reported a 13 percent rise in revenue in the June quarter to $69.7 billion, missing estimates of $70.8 billion and posting its fourth straight quarterly slowdown compared to a year earlier. Operating margins also fell to 28%, down 3 percentage points from a year ago. Net income shrank to $16 billion from $18.5 billion a year ago, missing Wall Street’s forecast of $17.4 billion. Earnings per share came in at $1.21, versus analysts’ estimates of $1.27. However, Alphabet’s chief financial officer, Ruth Porat, called the company’s second-quarter performance “solid,” noting that on a constant currency basis, revenue rose 16 percent. He said on a call with analysts that any apparent weakness could be explained by a surge in demand last year, when Google benefited from the coronavirus-induced work-from-home trend after the initial shock of the virus outbreak. Twelve months ago, revenue had jumped 62 percent year-over-year. “Last year’s very strong revenue performance continues to create tough indicators that will weigh on year-over-year ad revenue growth rates for the remainder of the year,” Porat said. Alphabet executives frequently cited “uncertainty” in their prepared remarks, saying a tough macroeconomic environment is causing widespread supply chain issues and inventory issues that have resulted in companies spending less on advertising. One disappointment was YouTube, where revenue of $7.3 billion missed forecasts of $7.5 billion. “On YouTube and [Google] network, spending pullbacks by some advertisers in the second quarter reflect uncertainty about a number of factors that are difficult to disentangle,” said Porat. He said the results showed “strength in search and momentum in the cloud.” Google’s Cloud division’s revenue rose 36 percent to $6.3 billion, but posted a loss of $858 million in the quarter, larger than the $591 million loss recorded a year ago. Google Search revenue rose 13 percent to $40.7 billion, slightly higher than estimates. Other Bets, the division that houses Google’s self-driving unit Waymo, posted a loss of $1.7 billion, compared with a loss of $1.4 billion a year ago. Currency movements contrasted 3.7 percent last quarter, and Porat warned investors to expect “an even bigger headwind” this quarter as the U.S. dollar trades at a 20-year high. The stock jumped more than 5 percent in after-hours trading as investors “breathed a sigh of relief” that the results weren’t worse, said Jesse Cohen, senior analyst at Investing.com, who described the quarter as “disappointing . . . in almost all business units”.

Analysts had been expecting a weak quarter, and in recent weeks forecasts have been cut further as fears of a US recession intensified and smaller rivals such as Snap posted impressive earnings. Revenue growth of 13 percent put Alphabet on a clear downward trajectory. Growth was 23 percent in the March quarter, 32 percent in the December quarter and 41 percent in the September quarter. Chief Executive Sundar Pichai told analysts it was a good time for Alphabet to “sharpen our focus” but assured investors the group would continue to make big, long-term investments. “Personally, I find moments like these to be enlightening,” Pichai said. “It is an opportunity to digest and . . . make sure we are working on the right things. . . taking a long-term view, ensuring we continue to invest in deep technology and computing. . . and to reallocate resources to our most critical priorities.” Alphabet, which this month said it would slow hiring for the rest of 2022, added 10,108 people in the quarter, with most hires in technical roles.