Punctuating the struggles of most sellers of digital advertising in the current climate, Google parent Alphabet reported an 8% drop in ad revenue at YouTube in the fourth quarter.
Google’s struggles in all ad categories dragged Alphabet earnings below expectations. On a per-share basis, they slipped to $1.05 from $1.53 in the year-ago quarter. Analysts had expected profit of $1.19 a share. YouTube, which has seen a boom in overall viewing and growth in its extensions in short-form video and pay-TV, posted ad revenue of $7.963 billion, compared with $8.633 billion in the prior-year period.
Total revenue of $76.05 billion fell about a half-billion dollars short of analysts’ forecasts. It inched up 1% over year-ago levels, or 7% when foreign-currency fluctuations are excluded.
A pullback in digital advertising, prompted by a turbulent macroeconomic environment highlighted by high inflation and surging interest rates, has hit several tech giants of late. Snap Inc. and Meta Platforms issued soft ad results earlier this week, though Meta’s eclipsing of Wall Street forecasts and other factors powered a strong gain in its share price despite the ad-sales woes.
Last month, Alphabet announced the layoffs of about 12,000 workers. In the earnings release, the company said that would incur charges of $1.9 billion to $2.3 billion, most of them recognized in the first quarter of 2023.
The tech giant also said it is “taking actions to optimize our global office space,” which could result in another $500 million in charges in the current quarter. “We may incur additional charges in the future as we further evaluate our real estate needs,” the company said.
Shares in Alphabet, which had recovered in January after a brutal 2022, declined 5% in after-hours trading.
