Alphabet reports Q1 revenue rose 23% YoY to $68.01B, as net income dropped to $16.44B, down from $17.93B YoY; traffic acquisition costs rose 23%
MOUNTAIN VIEW, Calif. - April 26, 2022 - Alphabet Inc. (NASDAQ: GOOG, GOOGL) today announced financial results for the quarter ended March 31, 2022.
Alphabet - Investor Relations
Context & Ripple Effects
This Q1 2022 print sits at the bottom of Alphabet's margin cycle: revenue accelerated to 23% growth while net income fell year-over-year for the first time since the pandemic-hit April 2020 quarter, when growth had already slowed to 13% and Other Bets losses were widening. The tell is traffic acquisition costs rising 23% — exactly matching revenue growth — meaning Alphabet paid away its incremental growth to distribution partners rather than converting it into profit.
First-order effects
Alphabet's shareholders absorb the squeeze directly: $68.01B of revenue produced less net income than the prior year's smaller revenue base did, because every point of growth was matched by a point of TAC.
Second-order effects
The pattern repeated the very next quarter — the Q2 2022 report showed another YoY net income decline alongside slowing revenue growth — forcing Alphabet toward the cost discipline visible later in headcount cuts and the margin recovery of the 2024 quarters.
Third-order effects
The cycle resolved in Alphabet's favor: by the Q1 2025 report, net income was up 46% on just 12% revenue growth, showing that once paid-distribution-heavy growth gives way to owned Search traffic, margins expand faster than revenue — the structural advantage of owning the query versus renting it.
The trend: Alphabet's earnings swing between two modes — buying growth through traffic acquisition costs and harvesting margin from owned Search traffic — and this quarter marks the trough of the buying phase.
Traffic Acquisition Costs (TAC), the metric used to show how much Google pays other websites to acquire traffic, came in higher than Wall Street expected at $11.99 billion. https://www.cnbc.com/...
Google missed ever so slightly on revenue and profits. On the other hand, I find it incredible that growing revenue 23% year over year is not only possible at their size but considered a miss. https://www.cnbc.com/...
Looks like this covid content hangover problem may not be exclusive to $NFLX (they were just first to report). YouTube had a dramatic slowdown as well. 14% growth this quarter. https://www.cnbc.com/... https://twitter.com/...
Google parent Alphabet posted slower sales growth as global economic turmoil disrupted digital ad spending, which has already been easing after pandemic-fueled highs, via @MeghanBobrowsky https://www.wsj.com/...
$GOOG Q1 2022 - Revenue up 23% to $68.0 billion - Profit down 8% to $16.4 billion - Google Cloud up 44% - YouTube up 14% - Other Bets up 122% - Other Bets loss up 1% - Traffic Acquisitions Costs up 23% - Employees up 17% to 163,906
Only in 2022 can a monopoly grow its topline at 20%+ and trading at 20x earnings and announce a huge buyback program and still be taken to the woodshed by the market
Why is @sundarpichai not buying $70 billion worth of #bitcoin? Stock buybacks just decapitalize the company, he needs a better CFO. https://twitter.com/...
Market doesn't love this quarter, but it's still crazy to think Google found $10 billion in ad revenue year over year. This is not a young company! https://www.cnbc.com/...
It's a good time for our companies and Directors to go for a Share buyback and purchase of shares. Alphabet announces $70 billion buyback @CNBC https://www.cnbc.com/...