New Delhi (India), 26th April 2023: The parent company of Google, Alphabet Inc., has reported first-quarter profit and revenue above projections owing to an increase in demand for cloud services and better-than-expected ad revenues. As a result Alphabet Inc. has said that it would repurchase $70 billion worth of stock.
Investors applauded the buyback plan, driving up the shares of the parent company of Google to as much as 4% in after-hours trading, before giving back gains to close up 1.6%.
Alphabet announced first-quarter ad sales of $54.55 billion, a little decline from the prior year, but still exceeding analyst expectations of $53.71 billion. It was the company’s third such fall since going public in 2004, but it was the second consecutive decline after a 4.6% decline in fourth-quarter ad sales.
Insider Intelligence senior analyst Max Willens said it was “notable” that the cloud computing industry made money, but “the reality is that Google Cloud remains comfortably behind its two most important competitors, and its growth is slowing.” Sales for the division increased by 28% to $7.41 billion.
In addition, advertisers, who account for the majority of Alphabet’s sales, have reduced their expenditure as a result of consumers returning to in-store buying following the relaxation of masking and other limitations. Also, with new channels like TikTok, which has a younger audience, marketers are experimenting more and shifting to such platforms.
In the meanwhile, the corporation made the decision to eliminate around 12,000 jobs in January in an effort to maintain strict cost management amid recessionary concerns. On a conference call with investors, chief financial officer Ruth Porat stated that she anticipated capital expenditures to be “modestly higher” this year than in 2022.
In addition, despite the recent repurchase of stock, Alphabet has worked to reduce spending on things like employee benefits and the utilisation of corporate assets. In a March internal email, Porat had warned staff to expect further cost-cutting measures in the months to come.
