Feb 2 (Reuters) – Alphabet Inc (GOOGL.O) reported lower-than-expected quarterly revenue on Thursday as the Google parent’s digital ad business struggled amid a slowing economy that dampened expectations. cut business spending and triggered mass layoffs.
Shares of Alphabet are down about 40% in 2022 and were down about 4% in after-hours trading.
Google’s ad revenue, which includes search and YouTube, fell to $59.04 billion from $61.24 billion as advertisers — the biggest contributor to Alphabet’s sales — scaled back spending in response to persistent inflation, high interest rates and fears of a recession. concerns.
Rival Meta Platforms Inc (META.O) impressed investors with quarterly results on Wednesday, promising further cost-cutting and product additions to better leverage advertising revenue.
Alphabet’s net income fell to $13.62 billion, or $1.05 a share, from $20.64 billion, or $1.53 a share, a year ago.
Fourth-quarter revenue rose to $76.05 billion from $75.33 billion a year ago. Analysts expected $76.53 billion, according to IBES data from Refinitiv.
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Advertisers, which generate the majority of Alphabet’s sales, scaled back spending as inflation and rising interest rates fueled concerns about consumer spending. Consumers flocked to the internet for their daily purchases at the height of the pandemic, only to return to shopping in brick-and-mortar stores as restrictions eased.
Google’s overall ad revenue fell to $59.04 billion in the fourth quarter from $61.24 billion a year earlier.
Google is the world’s largest digital advertising platform by market share, making it particularly vulnerable to fluctuations in online marketing spending. Its YouTube unit has faced a surge in rival platforms, notably TikTok, whose endless stream of short videos is attracting younger users.
Falling advertising demand also hurt companies like Meta Platforms and Snap Inc (SNAP.N ), which posted a $288 million loss in the fourth quarter on flat sales.
Revenue from advertising on YouTube, one of Alphabet’s most consistent moneymakers, fell nearly 8% to $7.96 billion, well below estimates of $8.25 billion, according to FactSet.
Cloud computing, however, was a bright spot, with revenue rising 32% to $7.32 billion, but at the slowest pace since the company began disclosing revenue figures for the segment.
Reporting by Nivedita Balu in Bengaluru and Greg Bensinger in San Francisco Editing by Devika Syamnath and Matthew Lewis
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