Alphabet revenue misses estimates as ad business takes a hit

February 2 (Reuters)-Alphabet Inc. (GOOGL.O) On Thursday, Google’s parent company’s digital advertising business reported lower-than-expected quarterly earnings as it struggled under an economic slowdown that has stifled corporate spending and caused mass layoffs.

Alphabet shares, which have lost about 40% of their value in 2022, are down about 4% in after-hours trading.

Google’s ad revenue, which includes search and YouTube, fell to $61.24 billion as advertisers, the biggest contributor to Alphabet’s sales, cut back on spending to combat persistent inflation, high interest rates and fears of a recession. to $59.04 billion.

Rival Meta Platforms (META.O) impressed investors on Wednesday Quarterly resultsis committed to further reducing costs and enhancing services to make better use of advertising dollars.

Alphabet’s net income decreased to $13.62 billion, or $1.05 per share, from $20.64 billion, or $1.53 per share, a year ago.

Fourth quarter revenues of $76.05 billion increased from $75.33 billion a year ago. Analysts had expected $76.53 billion, according to his IBES data from Refinitiv.

Advertisers, who make up the bulk of Alphabet’s sales, have cut back on spending as rising inflation and interest rates heighten concerns over consumer spending. At the height of the pandemic, consumers flocked to the internet for their daily purchases, but as restrictions eased, they returned to shopping in person.

Google’s overall advertising revenue fell to $59.04 billion in the fourth quarter from $61.24 billion a year ago.

As the world’s largest digital advertising platform by market share, Google is highly susceptible to fluctuations in online marketing spend. His YouTube division at the company faces a proliferation of rival platforms, especially his TikTok, which draws young users away with endless scrolling of short videos.

Declining ad demand will also hit companies like Meta Platform and Snap Inc (SNAP.N) Sales were flat in the fourth quarter with a loss of $288 million.

Revenue from YouTube ads, one of Alphabet’s most consistent revenue streams, fell nearly 8% to $7.96 billion, well below an estimated $8.25 billion, according to FactSet.

Cloud was a bright spot, with revenue up 32% to $7.32 billion, the slowest pace since the company began disclosing segment revenue numbers.

Reporting by Nivedita Balu, Bangalore and Greg Bensinger, San Francisco Editing by Devika Syamnath and Matthew Lewis

Our criteria: Thomson Reuters Trust Principles.