Google parent Alphabet reported its third-quarter earnings today and revenue from Google Search rose 11.3% on an annual basis to $44.03 billion. YouTube ad revenue beat estimates with a 12.5% year-over-year gain to $7.95 billion. Alphabet and Google CEO Sundar Pichai noted that the number of daily views for YouTube Shorts, the vertical videos that compete with TikTok, rose to 70 billion during the quarter, up from 50 billion during the third quarter last year.
Google’s overall advertising revenue during the quarter came to $59.65 billion, up 9.5% from the $54.48 billion reported for the same quarter a year ago. Other revenue, which would probably include Google Pixel devices, rose a hefty 20% year-over-year to $8.34 billion from last year’s $6.9 billion. Despite reporting revenue that grew 22.5% during Q3, Google’s Cloud Services failed to match Wall Street expectations of $8.64 billion in revenue as the unit had a top line of $8.41 billion.
Google’s costs to acquire its traffic rose 6.8% to $12.64 billion from $11.83 billion. Total revenue for the quarter came to $76.7 billion compared to the $69.1 billion the company took in during the third quarter of 2022, a gain of 11%. Net income rose 42% from $13.91 billion to $19.69 billion and diluted earnings per share came in at $1.55, up from the $1.06 reported during last year’s Q3 and the $1.45 that Wall Street analysts forecast.
Google’s shares are up 56% for the year not including the after-hours decline
The job cuts at Google showed up in the head count which was down 2.4% year-over-year from 186,779 employees during last year’s third quarter, to 182,381. CEO Pichai commented on the quarter by saying, “I’m pleased with our financial results and our product momentum this quarter, with AI-driven innovations across Search, YouTube, Cloud, our Pixel devices and more. We’re continuing to focus on making AI more helpful for everyone; there’s exciting progress and lots more to come.”
Ruth Porat, who is leaving the CFO role that she’s had for the last eight years to become chief investment officer, said, “The fundamental strength of our business was
apparent again in Q3, with $77 billion in revenue, up 11% year over year, driven by meaningful growth in Search and YouTube, and momentum in Cloud. We continue to focus on judicious capital allocation to deliver sustainable financial value.”
The $20 million miss in Cloud Services revenue hit Wall Street hard as Alphabet’s shares declined $8.50 or 6.07% to $131.62 in after-hours trading. The shares had finished the regular trading session at $140.12, up $2.22 or 1.61%.
