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Alphabet reported higher revenue and earnings for first quarter

Alphabet released first-quarter numbers that were better than expected by analysts. The stock increased by more than 4% in prolonged trading before trimming its gains.

The business also disclosed that its board has approved a $70 billion share repurchase.

These are the crucial figures:

  • Earnings: $1.17 per share compared to Refinitiv’s expectation of $1.07 per share.
  • Refinitiv estimates that revenue was $69.79 billion as opposed to the $68.9 billion predicted.

The company had missed consensus expectations for four consecutive quarters before posting a beat on the top and bottom lines.

  • Street Account said YouTube’s ad revenue was $6.69 billion instead of $6.6 billion.
  • According to StreetAccount, Google Cloud revenue was $7.45 billion instead of $7.49 billion.
  • Street Account said traffic acquisition costs (TAC) were $11.72 billion instead of $11.78 billion.

According to the quarterly release, Alphabet’s sales increased by 3% to $69.79 billion from $68 billion a year earlier. After nearly two decades of steady and quick growth, the company is stuck in a multi-quarter run of low single-digit revenue growth. Since last year, advertisers have been cutting back on their online marketing budgets, causing turmoil on Google, Facebook, and other platforms.

In an investor call, Ruth Porat, the company’s finance leader, stated that “the outlook remains uncertain” because of the difficult economic climate.

Ad revenue came in at $54.55 billion, which was less than analysts had predicted. Analyst predictions were maintained, and YouTube ad revenue decreased from the prior year.

In addition to the overall decline in ad spending, TikTok is increasingly challenging YouTube for short-form video viewers.

Google has had to make its most drastic cuts to deal with the recent advertising shortfall, including firing 12,000 employees in January, or around 6% of the workforce. Ruth Porat, the CFO, revealed “multi-year” cuts to things like equipment, staff services, and real estate this month.

During the quarter, charges from layoffs and reduced office space totalled $2.6 billion, according to Alphabet. From $16.44 billion, or $1.23 per share, net income decreased to $15.05 billion, or $1.17 per share.

In its cloud computing sector, which competes with Amazon and Microsoft, Google is already making a profit. Following a $706 million loss the prior year, the division generated operating income of $191 million in the quarter.

The Other Bets segment’s revenue, which includes the self-driving car startup Waymo and Google’s medical sciences division Verily, came in at $288 million, down from $440 million in the prior year. DeepMind, Alphabet’s subsidiary for artificial intelligence, will no longer be included in Other Bets beginning in the first quarter, the firm previously announced, but will instead be included in corporate expenses.

Google’s Search and Other income totalled $40.36 billion, slightly more than the $39.62 billion earned the previous year.

The success of the AI-based chatbot ChatGPT, which was introduced by Microsoft-backed OpenAI late last year, is putting pressure on Google. During the quarter, the company quickly released Bard, an AI chatbot.

According to a New York Times article published last week, Samsung is allegedly considering switching its smartphone lineup’s default search engine from Google to Microsoft’s Bing. Google’s stock fell more than 3.5% as a result. Considering Microsoft’s plans for Bing, a shareholder on Tuesday’s results call questioned Pichai about Google’s alliances with phone manufacturers like Samsung and Apple.

Deals have always been competitive, according to Pichai. “It all starts with continuing to innovate and improve in search and making sure we’re leading there,” he added of Google.

Currently, Google controls more than 90% of the search market. Pichai stated that he is “comfortable” with Google’s ability to enhance search and remain competitive in major transactions.

During its annual developer conference the following month, Pichai said that the business would be announcing improvements to its products, such as Android and its Pixel smartphones. According to CNBC’s report from last week, the company intends to release its first foldable smartphone next month for around $1,700.