Alphabet Inc. is feeling the sting of a downturn in digital-ad spending, as Google’s parent company reported just 6% sales growth year-over-year Tuesday and missed widely on its advertising revenue, pushing shares down in extended trading.
Alphabet
GOOGL,
GOOG,
reported net income of $13.9 billion, or $1.06 a share, in its fiscal third quarter, compared with net income of $1.40 a share in the same quarter a year ago. Total revenue improved a middling 6% to $69.1 billion from $61.88 billion a year ago, the slowest year-over-year growth since sales declined in June 2020, while revenue after removing traffic-acquisition costs was $57.3 billion, compared with $53.6 billion in the year-ago period.
Analysts surveyed by FactSet had estimated net income of $1.26 a share on ex-TAC revenue of $58.2 billion and overall revenue of $71 billion. Alphabet shares slipped 6% in after-hours trading immediately following the release of the results, after closing with a 2% increase at $104.48.
The results, which missed in several key product categories, further rattled investors, already spooked by poor quarterly results last week from Snap Inc.
SNAP,
Facebook parent company Meta Platforms Inc.
META,
is scheduled to report its third-quarter results Wednesday.
“Financial results for the third quarter reflect healthy fundamental growth in Search and momentum in Cloud, while affected by foreign exchange. We’re working to realign resources to fuel our highest growth priorities,” Alphabet Chief Financial Officer Ruth Porat said in a statement announcing the results.
Google’s total advertising sales improved to $54.5 billion from $53.13 billion a year ago, but widely missed analysts’ average expectations for $56.58 billion. Search was $39.5 billion, compared with $37.93 billion last year. YouTube ad sales slipped to $7.07 billion from $7.21 billion a year ago.
Google’s Cloud revenue climbed to $6.9 billion from $4.99 billion; Google Cloud is believed to be third in cloud sales behind rivals Amazon.com Inc.
AMZN,
and Microsoft Corp.
MSFT,
As is its customary practice, Alphabet did not disclose fourth-quarter guidance.
Google’s stock has skidded 28% so far this year. The broader S&P 500 index
SPX,
is down 19% in 2022.
