Google’s meteoric rise may be coming to an end.
On Tuesday, Alphabet, Google’s parent company, announced an 8% drop in quarterly profit, weighed down by slower growth in advertising on YouTube and search, as well as a drop in the value of its investments.
The firm reported a net profit of $16.44 billion in the first quarter, down from $17.93 billion in the same quarter a year ago – the first time the corporation’s quarterly profit has declined since the second quarter of 2020. Revenue increased by 23% to $68.01 billion. According to FactSet estimates, the earnings fell short of analysts’ forecasts, with a net profit of $17.33 billion on revenue of $68.05 billion.
Shares of Alphabet fell 4 percent in aftermarket trading.
Alphabet’s profit fell from a year ago, when the company experienced a major rebound in demand for digital advertising and posted a $4.8 billion gain in its stock holdings. For the first quarter, Alphabet reported a $1.07 billion loss from the value of its investments. The company has announced in the past that it holds shares of the ride-hailing service Lyft and building security firm ADT, both of which had seen their share prices fall along with the broader market.
Growth in Google’s two main ad businesses has also decreased compared to recent quarters. Advertising on YouTube increased by 14% year over year. According to YouTube, several European advertisers have reduced their investment on the platform due to the conflict in Ukraine.
The growth in search ads was 24 percent, down from a 36 percent increase in the fourth quarter of 2021. The quarter was also hampered by a strong currency, which hurt overseas revenue.
Alphabet’s chief financial officer, Ruth Porat, said that the business’s growth in the future quarters will be more modest than last year, when the company enjoyed favourable comparisons following a slowdown in 2020 during the early stages of the epidemic.
Alphabet’s chief financial officer, Ruth Porat, said that the business’s growth in the future quarters will be more modest than last year, when the company enjoyed favourable comparisons following a slowdown in 2020 during the early stages of the epidemic.
She predicted that Alphabet’s current quarter would be tough to compare to the previous year’s. It will reflect the company’s decision to cease operations in Russia, which contributed around 1% of overall sales in 2012.
Nonetheless, Alphabet’s mixed quarter demonstrated how much the company’s revenue grew during the pandemic last year. In the first quarter, revenue increased by 23%. –
— despite the corporation taking in almost $750 million every day — was a dramatic deceleration from a 41 percent increase in sales the previous year.
Alphabet has profited from greater internet activity during the pandemic, which normally implies more opportunity for the business to sell more advertising because Google search is often an on-ramp to the web, and YouTube is the most popular video destination online.
Google has changed modifications to how it permits shops to present available products for online buyers in response to Amazon’s increasing advertising business. Its goal is to persuade more individuals to begin their buying searches on Google rather than Amazon.
Morgan Stanley revealed in a recent survey that the percentage of people who start a business is on the rise.
Although the firm continues to lose money, Google’s cloud computing segment recorded a 44 percent growth in revenue. In the first quarter, losses were $931 million, down from $974 million a year ago.
Alphabet continued to employ aggressively, according to the company. According to the corporation, it had 163,900 employees at the end of March, up 7,500 from December.
