afaqs! news bureau

Alphabet misses Wall Street expectations as YouTube Ad revenue drops 1.9% in the Third Quarter

For the third quarter, the business made $69.1 billion in revenue and $1.06 in earnings per share.

The third quarter of 2022 saw a decline in ad spending that reduced YouTube's revenue. Google's video network reported a $7.07 billion reduction in ad revenues - a 1.9% decline — falling far short of Wall Street projections and marking its weakest growth in at least two years.

Overall, Alphabet, the parent company of Google, underperformed analysts' projections. For the third quarter, the business made $69.1 billion in revenue and $1.06 in earnings per share. Wall Street anticipated a top line of $70.61 billion and EPS of $1.25, according to data from Refinitiv.

YouTube ad sales increased 43% from the same quarter last year. For the quarter, analysts had anticipated revenue from YouTube ads. According to projections published by FactSet's StreetAccount, analysts had predicted that YouTube ad revenue for the quarter would total, on average, $7.42 billion. For the 2019 calendar year, YouTube ad revenue was first made public by Alphabet.

Sundar Pichai, CEO of Alphabet and Google, stated in the earnings statement, "We continue to focus our attention on a clear set of product and business priorities. "We are committed to making long-term, responsible investments and to responding to the economic climate."

In order to compete with the TikTok app, YouTube developed its short-form video feature, Shorts, during the previous two years. Google announced in June that there were more than 1.5 billion monthly active viewers of YouTube Shorts. This year, YouTube started running advertisements in Shorts, and in the first quarter of 2023, YouTube Shorts will provide a revenue-sharing programme for creators who fit specific requirements. Less than the 55% that are split among the creators of the main YouTube Partner Program, YouTube will only pay 45% of revenue to Shorts creators apportioned depending on views.

Google has made a number of cost-cutting moves in response to diminishing revenue growth. One of them, the company's Stadia cloud gaming service, was shut down last month. This summer, Pichai announced that by the end of 2022, Google would wind down its hiring rate. He stated at the Code conference last month that he wanted to increase the company's "efficiency" by 20%; hence, layoffs may be one method of achieving this goal.

The revenue from YouTube Premium and YouTube TV subscriptions is not included in the Alphabet-reported YouTube ad sales data. According to Google, YouTube TV is the most popular Internet pay-TV service in the US with more than 5 million members and free trial users as of July.

Have news to share? Write to us