Alphabet (GOOGL) First Quarter 2023 Earnings Report


Sundar Pichai, Managing Director of Alphabet Inc., speaks during Google’s virtual I/O Developer Conference in New York, U.S. on Wednesday, May 11, 2022. The conference aims to help developers to get the most out of Google’s tools and platforms. while the keynotes focus on hardware and software announcements for products slated for release within the next 12 months. Photographer: Michael Nagle/Bloomberg via Getty Images

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Alphabet shares rose more than 4% in extended trading on Tuesday after Google’s parent company reported first-quarter revenue above analysts’ estimates.

The company also said its board authorized a $70 billion share buyback.

Here are the key numbers:

  • Earnings: $1.17 per share adjusted.
  • Income: $69.79 billion vs. $68.9 billion, according to Refinitiv.

The revenue beat a streak of four straight quarters in which the company missed consensus estimates. It’s not immediately clear whether reported earnings compare to analyst Refinitiv’s estimate of $1.07 per share.

  • YouTube ad revenue: $6.69 billion vs. $6.6 billion, according to StreetAccount.
  • Google Cloud revenue: $7.45 billion versus $7.49 billion, according to StreetAccount.
  • Traffic Acquisition Costs (TAC): $11.72 billion vs. $11.78 billion, according to StreetAccount.

Alphabet’s revenue rose 3% from $68 billion a year earlier, according to the earnings report. The company is mired in a multi-quarter period of low-single-digit revenue growth after nearly two decades of steady and rapid expansion. With fears of a recession building since last year, advertisers have rattled online marketing budgets, wreaking havoc on Google, Facebook and others.

Ad revenue beat analysts’ expectations, but fell from a year earlier to $54.55 billion. YouTube’s advertising revenue remained in line with analysts’ expectations, also declining from a year ago. Google’s search and other revenue was $40.36 billion, up slightly from $39.62 billion a year ago.

In addition to the overall decline in ad spend, YouTube is also facing increased competition from TikTok in short-form videos. YouTube shorts now have 50 billion daily views, CEO Sundar Pichai said on an investor call on Thursday.

To deal with recent advertising weakness, Google had to make its most extreme cuts in its company’s history, including laying off 12,000 employees, or about 6% of its workforce in January. This month, Chief Financial Officer Ruth Porat announced “multi-year” cuts to areas including real estate, employee services and equipment.

Alphabet reported $2.6 billion in charges related to layoffs and reduced office space during the quarter.

The company said net profit fell to $15.05 billion from $16.44 billion a year earlier.

Google is finally generating profits in its cloud computing business, which competes with Amazon and Microsoft. The unit posted an operating profit of $191 million in the quarter, following a loss of $706 million a year ago.

Google is feeling the pressure from the popularity of the AI-based chatbot ChatGPT, launched late last year by Microsoft-supported OpenAI. The company quickly launched its own AI chatbot called Bard during the quarter.

Revenue from Other Bets, which includes Google’s life sciences unit Verily and self-driving car company Waymo, was $288 million, up from $440 million a year ago. year. The company previously said that starting in the first quarter, artificial intelligence subsidiary DeepMind would no longer be reported in Other Bets, but would be reported as part of Alphabet’s business costs.

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