Google’s parent company Alphabet Inc reported weaker-than-expected first-quarter results on Tuesday as YouTube missed Wall Street targets significantly, ad sales were weighed down by supply chain issues and inflation, and the war in Ukraine. reported. The world’s largest video advertising and search provider has had great success in its transition to online commerce over the past two years, but the outcome is difficult in the last economic phase of the pandemic which has led to a rise interest rates. This suggests rising transport costs and shortages of products, from sofas to cars to baby food.
This is its first failure since the pre-pandemic fourth quarter of 2019. Alphabet’s total cost has also increased by 23%. Analysts said Google’s overall ad revenue was in line with expectations, but YouTube’s ad growth was weaker than expected. Cloud revenue grew at a slower pace than the previous quarter, and Google’s “other” revenue, which includes app, hardware and subscription sales, was $6.8 billion. dollars, below its estimate of $7.3 billion.
Alphabet shares fell 6.5% in after-hours trading. David Wagner, his portfolio manager at Aptus Capital Advisors, said: According to Factset, he made $6.9 billion in YouTube advertising revenue, below his Wall Street target of $7.5 billion. Philipp Schindler, chief commercial officer of Google, said YouTube’s direct-response ads increased slightly in the fourth quarter. Alphabet said it posted first-quarter revenue of $68.01 billion, up 23% year-on-year but below the median estimate by financial analysts tracked by Refinitiv. of $68.1 billion.
Last week, Snap Inc warned that inflation, labor shortages and other economic challenges could weigh on ad revenue. Facebook’s parent company, Meta Platforms Inc, the second-largest online advertising platform that is expected to capture its 21.4% share of the global market in 2022, announced its results on Wednesday. The company’s shares fell 3.3% on Tuesday, according to Alphabet’s results. According to Insider Intelligence, Google is set to grab its 29%, or largest share, of the $602 billion global online advertising market in 2022, keeping it at least at the top for the 12th consecutive year.
Quarterly profit of $16.44 billion, or $24.62 per share, fell short of expectations of $25.76 per share. Alphabet shares are down more than 17% this year through Tuesday, but are up nearly 90% in the past two years.
Google’s product changes to address antitrust concerns and increased competition from companies such as Amazon.com Inc and ByteDance’s TikTok are hurting ad sales. Google also cut advertising and other services in Russia after invading Ukraine in the first quarter. Yet travel and entertainment advertisers are making a comeback and are better positioned to weather economic shocks than their competitors. Google’s advertising tools are designed to be user-friendly, easy to use, and more and more users are finding alternatives.
Summary of news:
- Alphabet misses revenue targets as YouTube performs poorly and ad sales come under inflation pressure
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