Google revenue

War on YouTube ad sales weighs on Google’s revenue

Alphabet said first-quarter sales reached $68.01 billion ($95.2 billion), up 23% from a year ago but below the average estimate of 68, $1 billion from financial analysts followed by Refinitiv, its first failure since the fourth quarter. of 2019.

Notably, YouTube ad sales of $6.9 billion missed analysts’ target of $7.5 billion, according to FactSet.

Ms Porat said the war in Ukraine that began in the quarter had an “outsized impact” on YouTube’s revenue as the company shut down ad sales in Russia and brand advertisers, particularly in Europe, cut spending after the outbreak of fighting.

Google overall made 1% of its sales in 2021 in Russia, Ms Porat said.

She also reported moderate growth in sales to direct-response advertisers on YouTube, and added that app store fee reductions to address antitrust concerns had wiped out gains in subscription revenue.

Google’s “other” revenue, which includes sales of apps, hardware and subscriptions, was $6.8 billion, below estimates of $7.3 billion.

Quarterly profit was $16.44 billion, or $24.62 per share, missing expectations of $25.76 per share.

Alphabet also said its board had authorized an additional $70 billion in share buybacks. It has repurchased more than $81 billion in stock over the past two years.

Google is expected to grab 29%, or the top share, of the $602 billion global online advertising market in 2022, at least the 12th straight year it has topped the rankings, according to Insider Intelligence.

Sophie Lund-Yates, chief equity analyst at Hargreaves Lansdown, said in a note that the macro environment could bring ups and downs for Alphabet, although the company remains indispensable to consumers and advertisers.

Last week, Snap warned that inflation, labor shortages and other economic challenges could put pressure on ad revenue.

Facebook’s parent company Meta Platforms, the second-largest online advertising platform with an expected global market share of 21.4% in 2022, was due to report results on Wednesday (Thursday AEST). Its shares fell 2.5% on Tuesday after Alphabet’s results.

Growing competition from companies such as Amazon.com and ByteDance’s TikTok is also reducing Google ad sales. Yet retailers continue to pour money into advertisements, and travel and entertainment advertisers are once again on the rise.

Additionally, Google is better positioned than its competitors to withstand economic shocks as its advertising tools tend to be among the last to be abandoned by advertisers as they are well known, easy to use and reach more users than alternatives.

Topping the list of risks the company faces are numerous lawsuits and investigations aimed at determining whether Google has engaged in anticompetitive behavior through its advertising and other activities.

The latest scrutiny focused on its pending $5.4 billion acquisition of cybersecurity services provider Mandiant, which the US Department of Justice is closely scrutinizing. Google said it still expects to close the deal this year.

Google Cloud, the unit that would contain Mandiant, grew its first-quarter revenue 44% from a year ago to $5.82 billion.

Reuters