Google Profit Falls 27% in Q3 2022 Earnings

Google CEO Sundar Pichai has been on a belt-tightening mission at Google for the past three months, so he seems to have seen it coming: Parent company Alphabet’s latest earnings are a disaster of sorts. The company’s third-quarter 2022 earnings reports were released last night, showing a 27 percent drop in earnings year-over-year, as well as weaker-than-expected earnings and earnings.

Revenue rose 6 percent year-on-year to $69.1 billion, a sharp decline in growth from the third quarter of 2021, when growth was 41 percent. Profit was $13.9 billion compared to $18.9 billion in the third quarter of 2021. As usual, Alphabet’s revenue is mainly driven by Google’s ad revenue and click-through rates, with the company citing spending cuts on “insurance, credit, mortgages, and crypto sub-categories.”especially. Worries about the economy and inflation are causing many Google customers to cut their advertising budgets.

Alphabet doesn’t go into the details of the non-advertising business, but the two biggest losses reported by Alphabet are in the Other Bets section and Google Cloud. Other bets lost $1.6 billion, up from a loss of $1.29 billion a year ago. “Other Bets” is a non-Google part of Alphabet and includes long-term R&D projects such as Waymo self-driving cars and the “Wing” drone delivery project. Google says the only significant sources of income for Other Bets are “medical technology”projects – that would be Verily and/or Calico – and “internet services”, also known as Google Fiber.

The other big loser is Google Cloud, which lost $699 million this quarter, compared to $644 million in Q3 2021. The “Google Cloud”on the earnings report combines Amazon Web Services’ infrastructure business and a suite of Google Workspace productivity apps such as Gmail and Google Docs. Workspace definitely makes money by serving ads to its 3 billion users, charging for user storage, and charging businesses for Gmail accounts with custom domains. Infrastructure business – Google Cloud Platform – growing but still struggling, being the third cloud provider after Amazon and Microsoft. Google chooses a “long-term path to profitability”with a cloud platform.

The Google Grim Reaper got a workout too; The laptop division of Google Hardware was closed, the experimental group Area 120 was forced to cut half of its projects, the remainder of Project Loon was spun off into a separate company, and Google Stadia was closed. YouTube tried (and canceled) a series of revenue-boosting experiments, such as adding up to 10 unskippable pre-roll ads and charging for 4K resolution, but it looks like the change that will remain is a 27 percent price increase. for YouTube. Premium Family Plans. The latest rumor is that Google Assistant, which doesn’t generate significant revenue, will have to cut support for various hardware platforms.

However, Google has hope for the future, as the company’s financial executives have repeatedly stressed a plan to roll out ads in “YouTube Shorts”later this year. For the first time in a long time, YouTube is facing serious competition from rival video site TikTok, and YouTube Shorts is a direct clone of this service. Shorts’ monetization plan also includes a 2023 Creator Ad Revenue Sharing, after which YouTube’s small video site will be fully operational.