THE alphabetowner of Google and YouTube, published this Tuesday (25) the financial results for the quarter ended September 30, 2022. The numbers were disappointing: YouTube advertising revenues fell, revenue growth slowed and profit shrunk.
YouTube advertising revenue dropped from $7.205 billion in the third quarter of 2021 to $7.071 billion in the same period in 2022. Bloombergfinancial market analysts estimated $400 million more than reported figures.
Another worrying number is growth. From 2020 to 2021, revenues jumped 41%; from 2021 to 2022, only 6%.
The company’s operating profit also decreased, from US$ 21.031 billion to US$ 17.135 billion. The margin went from 32% to 25%.
Even good news has a downside. Google Cloud reached US$6.868 billion in revenue, a significant increase from US$4.990 billion in the third quarter of 2021. However, the loss of this sector of the company increased, from US$ 644 million to US$ 699 million.
Alphabet cuts costs and products
In the press release, Alphabet and Google CEO Sundar Pichai says the company is focusing its efforts on a clear set of product and business priorities. He mentions new ways to monetize Shorts, YouTube’s short video format, similar to TikTok.
Focus and efficiency seem to be Google’s keywords to deal with this drop in profits.
Area 120, an incubator for experimental projects, aims to eliminate half of the ventures, and employees will have to find new roles in the company until January 2023.
In addition to these cuts, the company placed the foot on the brake for hiring; new employees, only for high-priority areas. The uncertainties of the economy are one of the reasons for this policy.
And even that is difficult: advertising is Google’s main source of revenue, but investments by advertisers have slowed in recent quarters. With rising inflation and interest rates, companies are afraid to open their wallets.