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Alphabet disappoints with revenue and net profit below expectations



(San Francisco) 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 seem to be entering the era of frugality after laying 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 macro-economic climate has become more complicated,” Sundar Pichai admitted at the outset during the conference call, to analysts.

The Californian group’s advertising revenue fell exceptionally over one year: $59 billion for Google (-3.6%) and less than $8 billion for YouTube (-7.8%).

As for the cloud computing 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 position,” commented Evelyn Mitchell of Insider Intelligence. “His recent layoffs are a clear sign that his 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 online 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 pillars “of Alphabet, are suffering from competition from Amazon (which is gradually eating away at market share in digital advertising) and from the poor economic situation, 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.

” Under pressure “

Snap (Snapchat) and Meta (Facebook, Instagram) had already announced the color with their quarterly results, published Tuesday and Wednesday: the two companies are still attracting more users, but their profits are plunging.

Snapchat now has 375 million daily users – 17% more than at the end of 2021 – who are spending more and more time interacting, according to the mobile application. But the company suffered net losses of $288 million, compared to a net profit of $23 million a year ago.

As for Meta, its profit for the crucial holiday season halved to $4.65 billion. And in 2022, its advertising revenue fell for the first time since the social media giant went public in 2012.

But the market was reassured by better than expected results, and promises of sobriety from Mark Zuckerberg, the company’s boss.

He wants 2023 to be “the year of efficiency” and clarified during the conference call with analysts on Wednesday that Meta was looking to “remove certain levels, certain intermediate management positions to speed up decision-making”.

Wedbush analyst Dan Ives says tech industry layoffs “will accelerate to cut spending,” digital advertising will remain “under pressure” and companies will be “cautious” to their forecasts for the year.

Caution that cost Microsoft points last week.

The market was disappointed that the IT group is expecting revenues of between $50.5 billion and $51.5 billion, due to weaker demand than in 2022 for personal computers. And cloud growth is expected to continue to slow after years of unbridled growth.

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