After Snapchat has severely disappointed the stock market with its data, investors are looking forward to fresh data from Google. The internet giant also has to accept deductions – but it turns out to be solid.
Google is also feeling the effects of the downturn in the internet advertising market: in the last quarter, business grew slower, and the profit of its parent company Alphabet fell significantly. At the same time, the internet giant has shown that it is in a good position to withstand market weakness better than its smaller competitors.
Alphabet’s quarterly profit fell year-on-year from $ 18.5 billion to $ 16 billion, the internet giant announced Tuesday after the US market closed. Sales have meanwhile increased by 13 percent to $ 69.7 billion (€ 68.9 billion). The most important area of the group – Google’s advertising business – grew by 11.6 percent. year on year up to USD 56.3 billion.
With high inflation and an economic slowdown, online advertising spending is on the horizon as companies cut costs. This was noticeable with the Snapchat video app with its slowest growth rate to date. One question is whether the two giants, Google and Facebook, will also feel the effects of the slowdown – whether their size and efficiency will make them more attractive to advertisers, especially in the current climate.
Catching up on business in the cloud
Google’s search engine advertising activity grew by 13.5 percent year-on-year to approximately $ 40.7 billion. Revenues on the YouTube video platform grew slower than before by 4.8%. to a good $ 7.3 billion. Chief Financial Officer Ruth Porat noted that last year’s quarter was exceptionally strong thanks to the recovery after easing the first pandemic constraints. At the same time, she admitted that some advertisers limit their expenses. Operating profit for Google services only increased from $ 22.34 to $ 22.77 billion. Headwinds can be expected in the current quarter, Porat said.
The race to catch up with Amazon and Microsoft in the cloud industry still costs Google a lot of money. While the division’s sales increased 35.6 percent to nearly $ 6.3 billion, its operating loss also rose 45 percent to $ 858 million.
Despite falling short of some analysts’ expectations, investors were pleased with the data, sending Alphabet shares up 4.8 percent in overtime trading. On the other hand, Snapchat, Snapchat, is down by more than a third after being disappointed in declining growth last week.
“I think this is a good time to sharpen our focus,” said CEO of Google and Alphabet Sudar Pichai during a conference call with analysts. The Group will continue to think in the long term and invest, among others into artificial intelligence.
Sales of so-called “other plants” under the Alphabet umbrella, such as the robot car company Waymo, stagnated at $ 193 million. The area’s operating loss increased from $ 1.4 billion to nearly $ 1.7 billion at the same time. At Waymo Alphabet is currently investing in the development of the robotaxi service, including in San Francisco. (dpa)