Alphabet (Google) disappoints with revenue and net profit below expectations

Alphabet (Google) disappoints with revenue and net profit below expectations

Alphabet is the parent company of Google and YouTube. Arnd Wiegmann / REUTERS

The turnover of the American company is down slightly, to 76 billion dollars, for the end of 2022.

Alphabet, parent company of Google and YouTube, disappointed on Thursday with revenue down slightly to $76 billion in the fourth quarter of 2022, as the tech giants appear to be entering the era of frugality after having laid off thousands of people.

Its net profit came in below analysts’ forecasts at $13.6 billion, down from $20.6 billion last year, according to its earnings release. The title of the world number one in online advertising lost more than 4% during electronic trading after the close of trading. “It is clear that after a period of significant acceleration in digital spending during the pandemic, the macroeconomic climate has become more complicatedSundar Pichai immediately admitted during the conference call to analysts.

The Californian group’s advertising revenue fell exceptionally over one year: 59 billion dollars for Google (-3.6%) and less than 8 billion for YouTube (-7.8%). As for the cloud activity (remote computing), it achieved a turnover of 7.3 billion dollars, below expectations. Ten days ago, in the wake of Amazon, Meta and Microsoft, Alphabet announced a large-scale social plan: around 12,000 jobs cut worldwide, or just over 6% of its total workforce.

“Precarious position”

«Google is in a precarious positioncommented Evelyn Mitchell of Insider Intelligence. “Its recent layoffs are a clear sign that its profits are poor“. The analyst points out that the markets are particularly interested in YouTube, “whose advertising revenue declined for the first time in the third quarter».

The video platform faces competition from long formats, with streaming services like Netflix, and short and captivating formats imposed by the very popular TikTok. It also had to adapt to Apple’s regulatory changes, which limit its ability to collect data to sell targeted advertising.

«Even advertising on the search engine and the services of cloud (…), financial pillarsfrom Alphabet, are suffering from competition from Amazon (which is gradually eating away at market share in digital advertising) and from the poor economic climate, adds Evelyn Mitchell. She estimates that Google will generate more than $180 billion in advertising revenue in 2023, and thus capture 28.8% of the global market.


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