Alphabet has posted mixed results for the fourth quarter and year-end, that reflects the decline in advertising spending.

Google parent Alphabet recorded notable declines in both its quarterly and annual profits, but it still managed to grow sales during a tough 2022.

It comes after both Apple and Amazon also posted their financial results on Thursday evening, which added to the overall gloom surrounding the tech sector at present.

Alphabet financials

Alphabet is currently contending with a number of challenges including its recent decision to axe 12,000 jobs (or roughly 6 percent of its workforce).

Alphabet said it would take a charge of between $1.9 billion and $2.3 billion, mostly in the first quarter of 2023, related to the layoffs of 12,000 employees.

It also expects to incur costs of about $500 million related to reduced office space in Q1, and warned that other real-estate charges are possible going forward.

It is also contending with a potentially serious breakup threat after the US Department of Justice (plus 8 US states) last month filed a civil antitrust suit against Google for monopolising multiple digital advertising technology products in violation of Sections 1 and 2 of the Sherman Act.”

These challenges come amid a difficult period as advertisers reign in their spending.

For the fourth quarter ending 31 December, Alphabet posted a net profit of $13.6bn, down from a profit of $20.6bn in the same year-ago quarter.

Quarterly revenues rose 1 percent to $76bn ($76.5bn had been expected, according to Refinitiv) from $75.3bn a year earlier.

When examining the full year financials, Alphabet posted a still healthy net profit of $60bn, but this down from a net profit of $76bn in 2021.

Revenues for 2022 rose 10 percent to $282.8bn, from $257.6bn in 2021.

“Our long-term investments in deep computer science make us extremely well-positioned as AI reaches an inflection point, and I’m excited by the AI-driven leaps we’re about to unveil in Search and beyond,” said Sundar Pichai, CEO of Alphabet and Google.

Google chief executive Sundar Pichai

There’s also great momentum in Cloud, YouTube subscriptions, and our Pixel devices,” Pichai added. “We’re on an important journey to re-engineer our cost structure in a durable way and to build financially sustainable, vibrant, growing businesses across Alphabet.”

YouTube advertising

YouTube continues to present challenges for Alphabet’s management, after YouTube advertising revenue came in at $7.96bn (compared to $8.25bn expected, according to StreetAccount estimates).

And this was down 8 percent from $8.63bn the year prior.

Besides declining advertising spend, YouTube is also facing heightened competition from TikTok in short-form videos.

YouTube shorts now has 50 billion daily views, CEO Sundar Pichai said in a call with investors Thursday.

Looking at other Alphabet divisions Google Cloud revenue came in at $7.32bn (compared to. $7.43bn expected). However the good news is that the $7.32bn is a 32 percent increase from the year prior.

Google’s Search and Other revenue came in at $42.6bn, down 2 percent from the year prior.

Alphabet executives confirmed the Google parent saw further pullback in ad spend by some in Q4 over Q3.

Google’s Other Revenues, which includes hardware and non-advertising YouTube revenue, came in at $8.8bn, up 8 percent from the year prior.

Upon news of the results, Alphabet’s stock dropped nearly 4 percent.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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