Alphabet released a less-than-pleasing Q4 2022 report reflecting the current tech downturn and the recession to come.
Alphabet Inc (NASDAQ: GOOGL) recently released its Fourth Quarter 2022 Results, which showed profit losses on its top and bottom lines. As a result, the tech giant’s shares fell nearly 4% in the post-close session, eroding some of its earlier gains of 7.28%.
Alphabet’s Q4 2022 Results By Numbers
On Thursday, Alphabet reported revenue of $76.05 billion versus the $76.53 billion analysts had expected. In addition, the California-based multinational also posted fourth-quarter earnings per share (EPS) of $1.05 compared to the consensus estimate of $1.18 per share. Alphabet’s reported YouTube ad revenue was also lower than expected at $7.96 billion compared to $8.25 billion. Additionally, Google Cloud revenue for the period ended December 31 was $7.32 billion versus $7.43 billion expected.
Alphabet, which posted 1% growth in the fourth quarter of 2022, also said it raised $12.93 billion in traffic acquisition costs (TACs) in the latest quarter. By comparison, analysts had expected $13.32 billion for the same period.
Youtube
YouTube ad revenue was lower than expected, also down 8% from $8.63 billion a year earlier. Meanwhile, last December, the National Football League (NFL) announced that YouTube would pay roughly $2 billion a year for the rights to its streaming scheme. This agreement to transmit “Sunday Ticket” has a duration of seven years.
YouTube is also facing increasing competition from TikTok regarding short-form videos. This development comes amid a pullback in ad spending for the global online video-sharing and social media platform.
layoffs
Alphabet explained that it expects to take on a charge of between $1.9 billion and $2.3 billion, with most of it coming in the first quarter of 2023. According to the tech giant, this charge is related to the mass layoffs of 12,000 employees announced in January. . In the middle of last month, a memo sent by Alphabet CEO Sundar Pichai to staff revealed the company’s downsizing plans. Pichai explained that the company would immediately cut staff amid ongoing fears of an impending recession. The memo read in part:
“I have some difficult news to share. We have decided to reduce our workforce by approximately 12,000 positions. We have already sent a separate email to employees in the US who are affected. In other countries, this process will take longer due to local laws and practices.”
In the memo, Pichai also expressed regret and remorse for letting go of “some incredibly talented people we worked hard to hire.” However, the CEO noted that the company had to make such difficult decisions to secure its own future. Pichai added:
“I am confident in the great opportunity that lies ahead of us thanks to the strength of our mission, the value of our products and services, and our early investments in AI.”
In addition to the reduction, Alphabet also expects to incur costs of around $500 million related to the reduction in office space in the first quarter of 2023. In addition, the company warned of other potential real estate charges in the future.
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Tolu is a Lagos-based blockchain and cryptocurrency enthusiast. He likes to demystify the crypto stories down to the basics so that anyone anywhere can understand them without too much prior knowledge. When he’s not up to his neck in crypto-stories, Tolu likes music, loves to sing, and is an avid movie buff.
