Sundar Pichai, CEO, Alphabet
Lluis Gene | AFP | Getty Images
Alphabet shares dropped in extended trading on Tuesday after the company reported weaker-than-expected earnings and revenue for the third quarter.
- Earnings per share (EPS): $1.06 vs. $1.25 expected, according to Refinitiv estimates.
- Revenue: $69.09 billion vs. $70.58 billion expected, according to Refinitiv estimates.
- YouTube advertising revenue: $7.07 billion vs $7.42 billion, according to StreetAccount estimates.
- Google Cloud revenue: $6.9 billion vs $6.69 billion, according to StreetAccount estimates
- Traffic acquisition costs (TAC): $11.83 vs $12.38, according to StreetAccount estimates
Revenue growth slowed to 6% from 41% a year earlier as the company contends with a continued downdraft in online ad spending. Other than one period early in the pandemic, it’s the weakest period for growth since 2013.
YouTube ad revenue slid about 2% to $7.07 billion from $7.21 billion a year ago. Analysts were expecting an increase of about 3%. Alphabet reported overall advertising revenue of $54.48 billion during the quarter, up slightly from the prior year.
The report marks an ominous start to Big Tech earnings week for investors focused on the digital ad market. Last week, Snap issued disappointing results and said it was unable to provide a forecast given the volatility in spending and concerns about the economy. Meta is scheduled to report results on Wednesday, and analysts are expecting a second straight quarter of declining revenue.
Prior to the after-hours drop, Alphabet shares were down 28% for the year, slightly underperforming the Nasdaq.
Alphabet’s top executives referenced the challenges the company faces at the top of Tuesday’s earnings release. CEO Sundar Pichai said in the statement that the company is “sharpening our focus on a clear set of product and business priorities,” while Ruth Porat, the finance chief, said “we’re working to realign resources to fuel our highest growth priorities.”
During the quarter, Google Cloud brought in $6.9 billion — more than analysts expected. That’s a notable increase from $5 billion the year prior. Losses in Google Cloud widened to $699 million from $644 million the year prior.
During the quarter, Google Cloud brought in $6.9 billion, more than analysts expected. That’s a notable increase from $5 billion the year prior. However, the group’s loss widened to $699 million from $644 million the year prior.
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