In the first quarter of this year, Google parent Alphabet posted its slowest revenue growth in two years and earnings fell more sharply than Wall Street had expected, reflecting the impact of the global economic turmoil on the digital advertising industry.

After the U.S. stock market closed on Tuesday, April 26, Eastern Time, Alphabet announced:

• The operating income in the first quarter was US$68.011 billion, a year-on-year increase of 23% from the first quarter of last year, the lowest year-on-year growth rate since the end of 2020. Analysts expected US$67.98 billion, a year-on-year increase of 32% in the fourth quarter of last year.

• Advertising performance indicators – the traffic acquisition cost (TAC) paid to import traffic partners recorded 11.99 billion US dollars in the first quarter, a year-on-year increase of 23.46%, accounting for 17.63% of revenue, and 17.8% in the fourth quarter of last year; excluding TAC After the revenue was 56.02 billion US dollars, a year-on-year increase of 23%, analysts expected 56.077 billion US dollars.

• Diluted earnings per share (EPS) in the first quarter was $24.62, down 6.35% year-on-year. Analysts expected $25.71, up nearly 38% year-on-year in the fourth quarter of last year.

• Net profit in the first quarter was US$16.436 billion, down 8.3% year-on-year. Analysts expected US$17.4 billion, a year-on-year increase of 35.6% in the fourth quarter of last year.

• The operating profit in the first quarter was 20.094 billion US dollars, a year-on-year increase of 22.2%. In the fourth quarter of last year, it increased by nearly 40% year-on-year. The operating profit margin in the first quarter was 30%, which was the same as the same period last year. The market expected 28.8%, compared with 29% in the fourth quarter of last year.

Alphabet also announced that the board of directors has decided to authorize the company to repurchase up to $70 billion in Class A and Class C shares. The repurchase is expected to be carried out from time to time depending on factors such as the overall business and market conditions, which may be purchased in the public market or through private negotiation. Transaction complete.

Alphabet’s Class A shares, which closed down more than 3 percent on Tuesday, fell further in after-hours trading after the earnings report was released, falling as much as 7 percent at one point.

Ad revenue growth slowed markedly from last quarter, YouTube ads fell short of expectations

The financial report shows that among Alphabet’s main businesses, the core revenue source Google advertising revenue in the first quarter was higher than expected, while YouTube’s advertising revenue was lower than expected, and the growth rate of Google advertising revenue was far less than the previous quarter:

• In the first quarter, Google’s service revenue was US$61.47 billion, an increase of 20.1% year-on-year, lower than analysts’ expectations of US$62.58 billion, and an increase of 31.3% in the fourth quarter of last year; Google’s service operating profit in the quarter was US$22.92 billion, an increase of about 17.3% year-on-year, analysts expected $22.15 billion.

• Among Google services, Google advertising revenue in the first quarter was US$54.661 billion, a year-on-year increase of 22.3%. Analysts expected US$54.13 billion, an increase of nearly 33% year-on-year in the fourth quarter of last year.

• In Google advertising, Google search advertising revenue increased by 24.3% year-on-year to $39.618 billion in the first quarter, YouTube advertising revenue in the quarter increased by about 14.4% to $6.869 billion, and analysts expected an increase of 23.2% to $7.4 billion. 35.7% and 25.4%.

This is another time YouTube ad revenue has fallen short of expectations. Its advertising revenue in the first quarter decreased by 20.4% compared with the fourth quarter of last year, and the revenue in the fourth quarter of last year was US$8.63 billion, compared with the market expectation of US$8.87 billion.

Media comments believe that YouTube’s advertising revenue is far less than expected, which may be due to iPhone advertising targeting restrictions and competition from TikTok.

In addition, Alphabet Chief Financial Officer Ruth Porat told the media that Alphabet received the impact of reduced advertising spending in the European market after the Russian-Ukrainian conflict. There are many uncertainties in the macro environment.

Google Cloud maintains high revenue growth, losses bigger than expected

Google Cloud, regarded as an important revenue engine in the future, has maintained a high revenue growth rate of more than 40%, but it has not yet made a profit, and the loss is higher than expected.

• Google Cloud’s revenue in the first quarter was US$5.82 billion, a year-on-year increase of 43.8%, maintaining the year-on-year growth rate of more than 40% on an average quarterly basis last year, higher than analysts’ expectations of US$5.77 billion.

• In the first quarter, Google Cloud’s operating profit continued to report a loss, with a loss of US$931 million, which was higher than the US$890 million in the fourth quarter of last year, but narrowed by 4.4% year-on-year, lower than analysts’ expected loss of US$893.2 million.

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