Google parent Alphabet misses estimates on YouTube, Europe ads | Technology News

Google’s parent company is Alphabet Inc. reported first-quarter revenue that fell short of analysts’ expectations, a rare omission for the tech giant that reflects slower ad sales in Europe and the lackluster performance of YouTube video service. The stock fell about 6% in extended trading.

The company also announced a $70 billion stock buyback program.

Revenue, excluding payments to distribution partners, grew 20% to $56 billion in the period ended March 31, Alphabet said in a statement. Analysts estimate an average of $56.1 billion.

Chief Financial Officer Ruth Porat said the company’s revenue was affected by the suspension of commercial activities in Russia and broader unrest in the aftermath of the Ukraine invasion.

“Also, there is a slight reduction in ad spend in Europe,” she told Bloomberg TV. Additionally, “there is a lot of uncertainty in the macro environment,” she said.

The company faced a tough comparison from the first quarter of a year ago when it posted a 32% growth in ad sales as commercials resumed following the introduction of a Covid-19 vaccine to help curb the spread of the virus. -withdraw and prevent batches of restrictions. This year, Google’s ad sales grew 22% in the first quarter.

YouTube generated ad revenue of $6.87 billion, compared with the average analyst estimate of $7.4 billion. In previous quarters, Google has said that the ban by Apple Inc. for third-party ad targeting has restricted some of YouTube’s iPhone business. Ahead of earnings, Daniel Salmon, an analyst with BMO Equity Research, lowered his YouTube sales estimate in part to reflect increased competition from ByteDance Ltd’s TikTok video app.

Google’s second-largest business, the network that runs ads elsewhere on the web, could be constrained by new European regulations restricting ad targeting. Total revenue in Europe was up 19% from a year earlier, but down 12% from the fourth quarter.

Google’s ad growth remains steady, said Brian Wieser, global president of business intelligence at advertising agency GroupM. “Google itself is a third of the industry. They are still growing north of 20%,” he said. “The problem is expectations, not the company.”

Google’s search advertising business, the company’s main revenue driver, grew 24% to $39.6 billion. Cloud device sales grew 44% to $5.82 billion. Both units topped estimates. In recent years, the Mountain View, California-based company has spent significantly on machinery and personnel to try to catch up with market leaders Inc. and Microsoft Corp. in providing computing power and storage through the internet.

In particular, this quarter produced “strong growth in Search and the Cloud, both of which benefit people and businesses as digital transformation continues,” CEO Sundar Pichai said in the statement.

Alphabet’s Other Betting units – a nascent collection of companies including self-driving car companies Waymo and Verily that aim to tackle various health issues with technology – generated $440 million in revenue dollars after a loss of $1.16 billion, although that’s a big improvement from years earlier.

Net income was $16.4 billion, or $24.62 per share, compared with $17.9 billion, or $26.29 per share, for the year-ago period. Analysts, on average, are predicting $25.71 a share.

Shares of Alphabet fell to as low as $2,207.79 in extended trading after closing at $2,373 in New York. Shares have fallen about 14% this month.

(Updated with comment from CFO in fourth paragraph.)

–With support from Emily Chang.

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