Alphabet Reports Revenues that Barely Grew Year-Over-Year

Inno Flores, Tech Times 02 February 2023, 10:02 pm

Despite the uncertainty of economic growth, tech giants are still earning money compared to startup firms affected by the increasing costs and soaring inflation. But it is still noticeable for companies like Google to see a slowdown in their earnings.

(Photo : ED JONES/AFP via Getty Images)
A google signs is seen as members of the Alphabet Workers Union (CWA) hold a rally outside the Google office in response to recent layoffs, in New York on February 2, 2023. - Google's parent company Alphabet announced in January it will cut about 12,000 jobs globally, citing a changing economic reality.

Barely Growing Revenue

Alphabet just recently reported its earnings for the fourth quarter of 2022, showing a revenue that barely grew yearly. Engadget reported that the company pulled in $76 billion during the quarter, which is only 1% of the Q4 earnings last 2021.

The company's stock also dropped to 4% after hours, losing 7.28% it gained in normal trading hours. Alphabet reported $7.96 billion (expecting $8.25 billion) in YouTube Advertising Revenue, while Google Cloud Revenue reported $7.32 billion (expecting $7.43).

The ad business of the company is the backbone of the company, but it was reported the revenue slipped by about 3.5% compared to 2021. However, other categories see 8% growth for products like google and NEst hardware and revenue from Play Store.

For overall profits, Alphabet reported a quarterly income of $13.6 billion, down 34% compared to the quarterly net income of 2021. Chief Executive Officer Sundar Pichai stated, "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."

The company announced that it would take charge of between $1.9 billion and $2.3 billion in 2023, as it will lay off 12,000 employees. For the reduced office space in the first quarter, Alphabet expects to incur costs of about $500 million.

Also read: Google's Parent Firm Alphabet Seeks to Lay Off 10,000 'Poor Performing' Employees

CNBC reported Alphabet and Google have been slowing down the pace of hiring as they deliver long-term profitable growth. Chief Financial Officer Ruth Porat stated during the earnings call that Alphabet hired 3,455 people during the fourth quarter.

In addition to pulling back in ad spending, YouTube is currently facing competition from TikTok in offering short-form videos. YouTube Shorts now has 50 billion daily views. The company has been eyeing YouTube as it has been more vulnerable to digital advertising than other sectors.

Compared to the big numbers reported by Alphabet in 2021, it seems like the earnings weren't as sustainable as other companies' profits. Adding to this is the uncertainty of what 2023 brings to the company.

Advertising Monopoly

Just recently, Google defended itself from the government after being sued for the time in three years. New York Times reported that the company was accused of abusing its position as an advertising technology monopoly.

Attorney General Merrick Garland claimed that Google has been engaging in anti-competitive behavior and alleged the company of participating in exclusionary conduct. Because of this, the Justice Department requested Google to divest parts of its ad technology products.