Alphabet, Google’s parent company, has announced its financial results for Q4, and fiscal year ended December 31, 2022, showing missed targets across the board, with total revenue at $76.05bn against an expected $76.53bn according to Refinitiv.
Fourth quarter revenue of $42.6bn was announced for Google search compared to $43.3bn for the previous year. The company’s stock dropped almost four percent in response to the announcement in the after-hours marketplace.
Ad revenue dropped from $61.2bn in Q4 2021 to $59bn in Q4 2022, reflecting a slowdown in demand for advertising on YouTube and for Google Cloud. This could be seen as an industry-wide slowdown in demand, as Microsoft reported a similar dip in advertising revenue.
Google Cloud brought in $7.3bn for the quarter, less than analysts expected, although it was a 32 percent increase from the previous year. Cloud has also hugely cut its operating income losses, almost by half, from $890m a year ago to $480m in Q4.
For the full fiscal year 2022, Google revenue rose ten percent to $282.8bn, compared to a 41 percent growth seen in 2021.
Looking ahead, Google remains focused on developing its AI search engine in competition with the newly announced investment from Microsoft in ChatGPT.
Sundar Pichai, CEO of Alphabet and Google, said: “Our long-term investments in deep computer science make us extremely well-positioned as AI reaches an inflection point, and I’m excited by the AI-driven leaps we’re about to unveil in Search and beyond. There’s also great momentum in Cloud, YouTube subscriptions, and our Pixel devices. 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.”
Ruth Porat, CFO of Alphabet and Google, said: “Our Q4 consolidated revenues were $76bn, up one percent year over year, or up seven percent in constant currency, and $283bn for the full year 2022, up ten percent or up 14 percent in constant currency. We have significant work underway to improve all aspects of our cost structure in support of our investments in our highest growth priorities to deliver long-term, profitable growth.”
