The time is not for panic at Alphabet, Google’s parent company, but its first quarter financial results have disappointed the market. And for good reason, the American giant made a profit of 16.4 billion dollars between January and March, a drop of 8% compared to the 17.9 billion dollars earned over the same period a year earlier.
As for the turnover of the Mountain View firm, it has certainly increased by 23% over one year, to 68 billion dollars, but it is however slightly lower than analysts’ expectations. These results have thus caused the action to fall by nearly 4% in stock exchanges after the closing of Wall Street.
Ad revenue weakened by war in Ukraine and TikTok
Google’s advertising revenue, which still represents the overwhelming majority of the California group, amounted to $54.7 billion in the first quarter, compared to $44.7 billion at the start of 2021. Growth in the advertising segment, growth engine history of the American giant, however, was altered by the suspension of its advertising services in Russia at the beginning of March due to the war in Ukraine.
It was above all YouTube that disappointed the market, with a turnover of 6.9 billion dollars in the first three months of the year, while analysts were counting on 7.4 billion dollars in advertising revenue for Google’s video platform. This suffers in particular from competition from TikTok, an application very popular with the youngest.
$931 million in losses for Google Cloud
According to the firm eMarketer, the platform of the Chinese group ByteDance should triple its advertising revenues in 2022 to reach 11.6 billion dollars, after capturing 3.9 billion dollars in 2021. According to Insider Intelligence, the advertising revenues of the application will reach 23.6 billion dollars by 2024, the equivalent of those of YouTube.
A pillar of the future in the strategy of the company headed by Sundar Pichai, the cloud branch continues to grow. Google Cloud revenue soared 44% in the first quarter to $5.8 billion. However, this division remains in deficit with a loss of 931 million dollars between January and March. Undoubtedly the price to pay for keeping up with the hellish pace led by Amazon Web Services and Microsoft Azure, market leaders on a global scale.