Alphabet has disappointed investors after it posted weaker than expected first quarter results, which sent shares in the firm down 2.5 percent late on Tuesday.
Alphabet’s posted financial results showed its first quarterly revenue miss of the Covid-19 pandemic, as YouTube ad sales had to contend with rising inflation, the Ukraine war, and increased competition from TikTok.
Despite all this, Google has grown significantly over the past year, with its total number of employees rising from 139,995 in March 2021, to 163,906 in March 2002.
Financially speaking, it was a mixed bag for Alphabet for the first quarter of the year.
For the period ending 31 March, Alphabet posted a net profit of $16.4bn, down from a profit of $17.9bn in the same year-ago quarter.
However overall revenues grew 23 percent to $68bn from $55.3bn a year earlier, slightly below analyst expectations of $68.1bn.
Digging down into the financials however, it seems that Google Search revenue rose from $31.9bn to $39.6bn; YouTube ads rose from $6bn to $6.9bn; and Google Network rose from $6.8bn to $8.1bn.
But YouTube’s advertising sales of $6.9 billion missed analysts’ target of $7.5 billion, according to FactSet, Reuters reported.
That was a big miss, and Wall Street reacted accordingly.
Google Cloud meanwhile grew from $4bn to $5.8bn, and Other Bets (which includes Waymo etc) more than doubled from $198m to $440m.
“Q1 saw strong growth in Search and Cloud, in particular, which are both helping people and businesses as the digital transformation continues,” noted Alphabet and Google CEO Sundar Pichai.
“We’ll keep investing in great products and services, and creating opportunities for partners and local communities around the world,” said Pichai.
So besides an overall Q1 profit slide, Alphabet’s results on the surface seem to be going in the right direction, i.e. upwards.
But analysts have been enjoying stellar results for the past two years from tech firms such as Alphabet, which had reaped the benefits from the Coronavirus pandemic forcing people to carry out more online shopping and other online activities.
But now Google is contending with maintaining this stellar growth in the face of the Ukraine war, supply chain issues and product shortages, as well as inflation, which is reportedly causing advertisers to scale back on marketing campaigns.
According to CFO Ruth Porat, Russia’s illegal war in Ukraine had an “outsized impact” on YouTube revenue because the company stopped ad sales in Russia, and brand advertisers, particularly in Europe, pulled back on spending after fighting broke out.
Reuters cited Porat as saying that Google overall derived 1 percent of its sales in 2021 from Russia.
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