Alphabet posted a less-than-savory Q4 2022 report that reflects the current tech downswing and looming recession.
Alphabet Inc (NASDAQ: GOOGL) recently posted its Q4 2022 results, which showed earnings miss on its top and bottom lines. As a result, the tech giant’s stock slid nearly 4% in the after-hours session, eroding some of its 7.28% earlier gains.
Alphabet Q4 2022 Results by the Numbers
On Thursday, Alphabet reported a revenue haul of $76.05 billion versus the markedly higher $76.53 billion analysts expected. In addition, the California-headquartered 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 advertising revenue also came in lower than expected at $7.96 billion compared to $8.25 billion. Furthermore, Google Cloud revenue for the period ended December 31st was $7.32 billion versus the $7.43 billion expected.
Alphabet, which posted a 1% growth for Q4 2022, also said it raked in $12.93 billion in Traffic acquisition costs (TAC) in the last quarter. By comparison, analysts had expected $13.32 billion for the same period.
YouTube
YouTube advertising revenue came in lower than expected, also representing an 8% drawdown from the $8.63 billion made the previous year. Meanwhile, last December, the National Football League (NFL) announced that YouTube would pay approximately $2 billion a year for rights to its broadcast scheme. This deal to broadcast “Sunday Ticket” runs for seven years.
YouTube also faces escalating 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 a charge between $1.9 billion and $2.3 billion, with most of it coming in Q1 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 disclosed the company’s downsizing plans. Pichai explained that the company would make the staff cuts immediately amid sustained fears of an impending recession. The memo read in part:
“I have some difficult news to share. We’ve decided to reduce our workforce by approximately 12,000 roles. We’ve 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 over letting “some incredibly talented people we worked hard to hire” go. However, the CEO noted that the company had to make such tough decisions to secure its own future. Pichai added:
“I am confident about the huge opportunity in front 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 downsizing, Alphabet also expects to incur costs of around $500 million linked to reduced office space in Q1 2023. Furthermore, the company warned of other likely real-estate charges going forward.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
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