Google parent Alphabet, which employs more than 5,000 people in Ireland, missed market estimates for quarterly revenue on Tuesday as advertisers cut back on their spending in the face of an economic slowdown.
The market for online advertising has been strained globally on fears that consumers may curb their spending as they grapple with a spike in interest rates and runaway inflation, prompting companies such as Snap Inc to issue a revenue growth warning.
Shares in Alphabet fell 5 per cent in after hours trading in the United States.
“We’re sharpening our focus on a clear set of product and business priorities,” chief executive Sundar Pichai said in a statement. “Product announcements we’ve made in just the past month alone have shown that very clearly, including significant improvements to both Search and Cloud, powered by AI, and new ways to monetise YouTube Shorts,” he said.
“We are focused on both investing responsibly for the long term and being responsive to the economic environment,” Mr Pichai added.
Google’s advertising revenue was $54.48 billion (€54.65 billion) in the third quarter, compared with $53.13 billion last year.
The company said total revenue was $69.09 billion in the quarter ended September 30th, compared with $65.12 billion a year earlier.
Analysts on average expected revenue to be $70.58 billion, according to Refinitiv data.
“Financial results for the third quarter reflect healthy fundamental growth in Search and momentum in Cloud, while affected by foreign exchange,” chief financial officer Ruth Porat said. “We’re working to realign resources to fuel our highest growth priorities.”
Net income fell to $13.91 billion, or $1.06 per share, from $18.94 billion, or $1.40 per share, a year earlier.
In contrast, Microsoft surpassed Wall Street targets for first-quarter revenue on Tuesday as the ongoing shift to hybrid work powered demand for its cloud-based services and helped cushion a slump in the personal computers business.
A diverse portfolio of products including Outlook and Teams has made Microsoft essential to businesses adopting flexible work models, helping it retain and attract customers at a time when a broader economic slowdown has sapped corporate spending.
“In a world facing increasing headwinds, digital technology is the ultimate tailwind,” Satya Nadella, Microsoft chairman and chief executive officer, said. “In this environment, we’re focused on helping our customers do more with less, while investing in secular growth areas and managing our cost structure in a disciplined way,” he added.
The company reported revenue of $50.12 billion for the quarter, compared with $45.32 billion a year earlier. Analysts on average had expected $49.61 billion, according to Refinitiv IBES data.
Net income fell to $17.56 billion, or $2.35 per share, during the quarter ended September 30th, from $20.51 billion, or $2.71 per share, a year earlier.
We continue to see healthy demand across our commercial businesses including another quarter of solid bookings as we deliver compelling value for customers,” said Amy Hood, executive vice-president and chief financial officer of Microsoft. — Additional reporting: Reuters