[Asia Economy Reporter Jeong Hyunjin] Alphabet, Google's parent company, reported that its online advertising revenue, including YouTube, fell short of expectations in the first quarter (January to March) of this year. Following the earnings announcement, the stock price dropped by about 5%.
On the 26th (local time), Google announced its first-quarter earnings, reporting revenue of $68.011 billion, a 23% increase compared to the same period last year. This slightly missed the market forecast of $68.11 billion, and the growth rate was somewhat lower than the 34% recorded in the first quarter of last year. Net profit decreased by 8%, from $17.9 billion in the first quarter of last year to $16.4 billion this year.
Ruth Porat, Alphabet's Chief Financial Officer (CFO), said in an interview with Bloomberg TV that revenue has been broadly affected by the suspension of operations in Russia and the impact of the Ukraine invasion, adding, "Additionally, advertising spending has decreased in Europe."
Specifically, advertising revenue in the first quarter increased by 22.3% year-over-year to $54.66 billion. In particular, YouTube advertising revenue was $6.87 billion, significantly below the market forecast of $7.51 billion. CNBC assessed that the slight decline in usage due to the global return to normal life after COVID-19 and the growth of competitor TikTok affected the performance.
Other Google advertising revenues, including Google Search and Google Network, were $39.618 billion and $8.174 billion respectively, up 24.3% and 20.2% year-over-year.
Google Cloud revenue rose 44% year-over-year to $5.821 billion, exceeding the market forecast of $5.76 billion. However, the cloud division recorded an operating loss of $931 million in the first quarter, maintaining a similar level to the first quarter of last year, indicating ongoing challenges in profitability recovery.
Sundar Pichai, Alphabet's Chief Executive Officer (CEO), said that the search and cloud divisions are showing strong performance, adding, "We will continue to invest in great products and services and create opportunities for partners and local communities worldwide."
Following the earnings announcement, Alphabet's stock price fell about 5% in after-hours trading due to disappointment over advertising revenue. Although Alphabet also announced a $70 billion share buyback on the same day, it was unable to prevent the stock price decline. The scale of Alphabet's share buybacks has significantly increased from $25 billion in 2019 and $50 billion last year.
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