On April 25th, Alphabet Inc (NASDAQ: GOOG) reported its first quarter revenues and earnings that topped expectations. Google-parent finally broke the spell after missing estimates for fourth quarters in a row while Meta Platforms Inc (NASAQ: META) also reported its sales rose after three quarters of declines.
Key First Quarter Figures
Revenue rose 3% YoY as it amounted to $69.79 billion, topping the $68.9 billion that Refinitiv’s survey of analysts expected. The resulting earnings amounted to $1.17 per share, also topping the expected $1.07 per share. Net income dropped from last year’s $16.44 billion, or $1.23 per share to $15.05 billion, or $1.17 per share.
Revenue Per Segment
YouTube advertising generated $6.69 billion to total revenue, topping StreetAccount’s $6.6 billion. Google Cloud revenue amounted to $7.45 billion, coming in slightly below StreetAccount’s estimate of $7.49 billion. Traffic acquisition costs amounted to $11.72 billion, also below Street Account’s estimate of $11.78 billion.
Other bets that include the life science unit and self-driving company Waymo generated $288 million in revenues, which is quite a drop from last year’s $440 million.
Cloud Computing Business Is Finally Making A Profit
While Amazon.com Inc (NASDAQ: AMZN) scared investors with a cloud growth slow down, Google’s cloud unit finaly came out of the woods. After last year’s loss of $706 million, the cloud unit reported an operating income of $191 million.
Playing Catch-Up With Microsoft In The AI Field
Microsoft’s chatbot ChatGPT is giving Google a headache. In response, it launched its own AI-based chatbot Bardduring the quarter that is open to U.S. and UK users for testing purposes. The launch has been criticized for being rushed to compete with Microsoft who announced ChatGPT will be integrated in its Bing search engine, with Google warning Bard’s users of possible mistakes with some answers.
Extreme Cost Cuts To Deal With The Weak Ad Online Market
Fears of an upcoming recession have wreaked havoc on Google, as well as on Meta that reported an unexpected increase in sales for the first quarter on April 27th. But Meta’s latest results gave hope for the online ad market while Google parent had to make the most extreme cost cuts in its history to deal with this challenging environment whose outlook is still very much uncertain. In January, it trimmed its workforce by 6%, letting go 12,000 employees. More recently, CFO Ruth Porat announced “multi-year” cuts in real estate, employee services and equipment. During the quarter, charges related to the layoffs and office space reduction amounted to $2.6 billion
Its online ad peer Meta gave an optimistic outlook as well, forecasting that revenue would grow in the range between 2.4% and 11.1% in the undergoing, second, quarter. Although the top line’s 3% growth is a far cry from the 25% to 30% growth rate that Meta used to regularly report back in the days it was known as Facebook, this figure gives hope that the digital ad business might be rebounding. Although Google’s ad revenue exceeded analyst expectations, it dropped compared to last year’s quarter to $54.55 billion. Google has also found itself in a more competitive landscape with YouTube competing with Tik Tok in the field of short videos.
The Latest Results Provide A Beacon Of Hope But Things Are Far From How They Used To Be.
Despite topping estimates, Google has found itself in low single-digit revenue growth after nearly two decades of consistent and rapid growth. It still holds more than 90% of search market share but Google’s shares went down more than 3% last week after New York Times’ report that indicated Samsung is reportedly considering switching from Google to Microsoft’s Bing for its smartphone lineup. Google needs to show it is able to remain competitive so expectations are high for its annual developer conference that is happening next month. CEO Sundar Pichai teased about upcoming announcements related to product updates, including smartphones.
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This article Google Tops Expectations Despite Ad And Competitive Headwinds originally appeared on Benzinga.com
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