Google parent Alphabet’s (GOOG, GOOGL) third quarter earnings report fell short of expectations in revenues and profits, in large part due to YouTube advertising revenue falling $400 million short of estimates.
Revenue excluding traffic acquisition costs (ex-TAC) came in at $57.27 billion, below Bloomberg’s compiled expected $58.2 billion. Earnings per share came in at $1.06 vs Bloomberg’s expected $1.25.
Alphabet shares dropped 6% after the report’s release.
Digital advertising has been slowing down for a few quarters now, as rising inflation and slowing economic activity have forced companies to cut back on their budgets.
Social media companies have endured the brunt of the cutbacks, with Snap reporting a net loss of $360 million as revenue grew only 6%. Meta was similarly hit, as the social media giant reported its first decline in year over year revenue in the second quarter. Meta’s next earnings report will come out October 26th.
Meta and Snap have had a harder time of it due to having to grapple with Apple’s new privacy update, which deprived them of tracking data they were using to track users and target their advertising.
Alphabet however, has extensive data on users courtesy of Google’s search app tracking users, as well as YouTube’s tracking of its users. However even despite being relatively immune to Apple’s privacy update, Alphabet was not able to avoid the consequences from the economic slowdown.
Bloomberg has reported Alphabet has had to cut back spending on projects at its Area 120 incubator, forcing workers in the group to apply for other jobs in the company.
The Daily Financial Trends
