Google parent Alphabet Inc released weaker-than-expected earnings and revenue for the first quarter, primarily hit by a big miss at YouTube.
The world’s largest provider of search and video reported revenue of $68.01 billion. However, it came in lower than the average market estimate of $68.11 billion. At the same time, the figure indicated a slowdown from the 34.00% increase in the same period last year.
Meanwhile, Alphabet Inc’s advertising revenue posted at $54.66 billion, higher than the $44.68 billion a year earlier.
However, YouTube ad revenue fell short of analyst consensus. It was at $6.87 billion, lower than the expected $7.51 billion. The video platform was a particular beneficiary of the pandemic, as users were primarily at home on their devices.
Alphabet Inc. explained that YouTube experienced modest growth in direct response ads. The miss also reflects tough comparisons to a solid first quarter of 2021.
In addition, the ongoing Ukraine war, rising inflation, and product shortages caused advertisers to dump marketing campaigns.
During the quarter, Google halted most of its Russian operations due to the invasion of Kyiv. In line with this, it posted gradual revenue growth in the European region, including the Middle East and Africa. Its profit slowed to 19.00% from 33.00% a year earlier.
The deceleration also comes as the Chinese site TikTok captures a growing social media video market share. Then, other media companies roll out video and streaming services to further tighten the competition in the sector.
Nevertheless, Alphabet Inc.’s cloud business was a standout in the quarter. It edged up 44.00% to $5.82 billion, beating the $5.76 billion estimate.
Accordingly, more big enterprises transfer workloads away from their own data centers.
Alphabet Inc. Announces $70B Buyback
On the same day, Alphabet Inc. mentioned that its board of directors authorized $70.00 billion in share repurchases. This move is a significant step up from last year’s authorization of $50.00 billion. It also followed a buyback of $25.00 billion in 2019.
The announcement is a significant acceleration in the Google parent company’s strategy to return capital to shareholders.
Alphabet explained it would consider the stock price in deciding when to repurchase its shares. Additionally, it will also consider the current market conditions. Its stock declined 2.55% or 60.50 points to $2,312.50 per share in the after-hours market. It trailed a drop of 3.59% or 88.48 points in the regular hours trading. Furthermore, the firm has traded 18.17% lower for the year as of Tuesday’s close.