Alphabet revenue misses estimates as ad business takes a hit
Alphabet Inc on Thursday reported lower-than-expected quarterly revenue as the Google parent's digital ad business struggled under an economic slowdown that has choked corporate spending and triggered mass layoffs.
Shares of Alphabet, which lost roughly 40% of their value in 2022, were down about 4% in after-hours trading.
Revenue from Google advertising, which includes Search and YouTube, fell to $59.04 billion from $61.24 billion, as advertisers - the biggest contributors to Alphabet's sales - dialled back spending to cope with persistent inflation, high-interest rates and recession fears.
Rival Meta Platforms Inc on Wednesday impressed investors with its quarterly results, promising to further slash costs and boost offerings to better capitalize on ad dollars.
Alphabet's net income fell to $13.62 billion, or $1.05 per share, from $20.64 billion, or $1.53 per share, a year earlier.
Revenue rose to $76.05 billion in the fourth quarter from $75.33 billion a year ago. Analysts were expecting $76.53 billion, according to IBES data from Refinitiv.
Advertisers, which contribute the bulk of Alphabet's sales, pulled back on spending as rising inflation and interest rates fueled concern over consumer spending. Consumers had flocked to the internet for everyday purchases during the height of the pandemic but have returned to in-person shopping as restrictions have eased.
Google's overall advertising revenue slipped to $59.04 billion in the fourth quarter from $61.24 billion a year earlier.
Google is the world's largest digital ad platform by market share, making it uniquely susceptible to fluctuations in online marketing spending. Its YouTube division has faced a surge in rival platforms, particularly TikTok, whose endless scroll of short videos is drawing younger users away.
Falling ad demand also hurt companies such as Meta Platforms and Snap Inc which swung to a loss of $288 million in the fourth quarter on flat sales.
Revenue from YouTube ads, one of Alphabet's most consistent moneymakers, fell nearly 8% to $7.96 billion, well below the estimate of $8.25 billion, according to FactSet.
Cloud was a bright spot, however, with revenue growing 32% to $7.32 billion, but at its slowest pace since the company began disclosing the segment's revenue numbers.
Reuters
