Google parent Alphabet posted weaker than expected third-quarter earnings Tuesday as the search giant deals with an inflation-mired economy and slowing advertising revenue.
In the quarter ended Sept. 30, Alphabet reported net income of $13.9 billion, or $1.06 per share, on revenue of $69 billion. Analysts expected the company to post earnings of $1.25 per share on revenue of $70 billion, according to Yahoo Finance. Net profit fell 27% from a year earlier.
The weaker than expected results come as advertising, the company’s main revenue source, sees headwinds in a tumultuous economy. Inflation rose 8.2% in the US in September, and other parts of the world are seeing prices rise by upward of 50%, eating into consumer appetite for spending. Though advertising revenue increased 2.5% year over year to $54.4 billion, it fell 3% between the second and third quarters. For comparison, a year ago, Google’s ad revenue surged 69% when advertisers were battling to meet consumer demand in the midst of the pandemic.
In after hours trading, investors sent Alphabet stock down 6% to $98.80. It’s the third consecutive quarter Alphabet has missed estimates.
Google’s search and cloud computing businesses have healthy fundamentals, Chief Financial Officer Roth Porat said in a statement. But acknowledging the difficult results, she added, “We’re working to realign resources to fuel our highest growth priorities.”
Google continued to hire in the second quarter, even as Chief Executive Sundar Pichai said in July that Google would slow hiring. Google added 12,765 employees to its workforce between June and September, growing from 174,014 workers to 186,779.
More to come.
