Alphabet’s shares slipped by 6 per cent in after-hours trading on Tuesday after the Google parent company’s revenues fell short of Wall Street estimates and sales at its YouTube advertising business unexpectedly declined.
Total revenues grew 6 per cent to $69.1bn, missing forecasts for a 9 per cent increase, according to Refinitiv.
Google Search revenues grew 4.2 per cent to $39.5bn, missing forecasts for 8 per cent growth. YouTube advertising revenues fell by 2 per cent to $7.1bn, versus analyst expectations for an increase of 4.4 per cent. It was the first decline for YouTube since the company started reporting its performance separately in 2020.
“It’s a bad omen for digital advertising at large,” said Evelyn Mitchell, analyst at Insider Intelligence. “This disappointing quarter for Google signifies hard times ahead if market conditions continue to deteriorate.”
Revenue at its fast-growing Google Cloud increased 38 per cent to $6.9bn. The unit still recorded a net loss of $699mn, compared with a loss of $644mn a year before.
Alphabet chief executive Sundar Pichai told investors the group was “sharpening our focus on a clear set of product and business priorities”.
“We are focused on both investing responsibly for the long term and being responsive to the economic environment.”
The strong US dollar knocked 5 percentage points off revenue growth, according to Ruth Porat, chief financial officer, who said the company was “working to realign resources to fuel our highest growth possibility”.
Diluted earnings per share were $1.06 versus $1.40 in the same quarter last year and lower than the $1.25 expected by analysts.
