Revenue rose 7% to $76.0bn in the fourth quarter and ignoring the effect of exchange rates, which was below market expectations. There were declines in Google advertising revenue, including across Google Search and YouTube.
Google Cloud saw revenue rise to $7.3bn, up from $5.5bn last year.
Alphabet had 190,000 employees, up from 156,000. Earlier in January, the group announced plans to reduce its workforce by around 12,000 roles. This is expected to result in a $1.9bn charge which will be reflected in the first quarter.
Operating profit fell to $18.2bn from $21.9bn, partly reflecting higher research and development spending.
Alphabet had net cash of $99.1bn as at the end of 2022.
Alphabet shares fell 4.9% in after-hours trading.
View the latest Alphabet share price and how to deal
Our view
The market was disheartened by Alphabet's results. A slowing economy is always a tough time for companies that rely on advertising revenue and the Google and YouTube owner isn't immune.
While we agree conditions are tougher than usual, we continue to think Alphabet is one of the better placed names in the industry. The scale and power of Google's reach is formidable, and that won't be undone by a downturn. Alphabet's essential status for marketers makes it more able to stomach inflation, as its customer base is about as sticky as they come.
We're also supportive of plans to downsize the workforce. While advertising revenues come off the boil, it's important to keep costs in check. We can't rule out further ups and downs in the share price while global economies navigate their landing points, because this will have an impact on Alphabet's bottom line.
Core advertising profitability has given Alphabet the firepower to invest in various side-projects. Most notable is Google Cloud, where revenues are growing incredibly quickly. Google's younger operations here mean the division is still heavily loss making, but the cloud is building sufficient steam that profits should be able to break through the mist within a reasonable timeframe. Other bets, that range from self-driving cars to life sciences barely generate any revenues let alone profit. One of these moon-shots could eventually be as world changing as Google itself, but that's some way off.
Our main concern relates to the competition authorities. Alphabet has already racked up billions in fines, and its increasing dominance puts the group at the forefront of regulators' minds. Regulators who have an increasing willingness to act.
Competition is also heating up, with the rise of short-form videos from the likes of TikTok or Instagram reels vying for Alphabet's important YouTube viewers. At this point there aren't any flashing red indicators, but as the medium develops it's a trend to watch closely.
It's easy to debate the ups and downs, threats and opportunities of this tech giant, but the fact of the matter is, Alphabet has around $100bn in net cash languishing on the balance sheet. That means it's more than able to stomach disruption and return some cash to shareholders too via a hefty buyback.
Overall, Alphabet carries more regulatory risk than some of its peers, so it's important to keep that in mind. Despite the regulatory and wider macro threats there is potential for further growth over the long-term. Investors should however be aware there's likely some volatility waiting in the wings.
Alphabet key facts
All ratios are sourced from Refinitiv. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn't be looked at on their own - it's important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
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