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As advertisers curbed spending and braced for a possible recession, Google’s parent company’s summer sales growth fell to its slowest pace since the pandemic roiled the economy more than two years ago.
Alphabet, which owns a number of smaller technology companies alongside Google, reported Tuesday that it had revenue of $69.1 billion for the July-September quarter, up 6% from the same period last year.
For the first time since his 2020, from April 2020 to his June, Alphabet’s quarterly sales increased by less than 10% year-over-year.
Google’s advertising revenue declined even more dramatically than Alphabet’s overall revenue. Advertising revenue reached $54.5 billion, up just 2.5% from the year-ago quarter. In another sign of tough times, YouTube’s quarterly ad revenue was down 2% year over year. This is the first time the video site’s revenue has declined since Google began reporting his results in 2019.
“Online advertising spending is clearly slowing more than we thought,” said Edward Jones analyst David Heger.
Falling sales also weighed on Alphabet’s profits. The Mountain View, Calif.-based company made his $13.9 billion in earnings at $1.06 per share, down 27% from the year-ago quarter. Both earnings and his earnings per share fell short of expectations of analysts surveyed by FactSet. Alphabet’s stock fell nearly 7% in long-term trading after the numbers were released. The stock has fallen more than 30% this year, wiping out about $600 billion in shareholder wealth.
Alphabet CEO Sundar Pichai described the situation as “uncertain” on a conference call with analysts, adding: It’s time to take the time to fine-tune the business.
Google’s money machine, underpinned by the dominant search engine, regained momentum last year as pandemic restrictions eased and government stimulus boosted the economy, with Alphabet’s revenue jumping 41% over the past year , pushing the stock price to new highs.
But the economy has been sluggish in recent months as the central bank steadily raises interest rates to combat the highest inflation rate in more than 40 years, threatening to plunge the economy into recession. Many households have already tightened their budgets and cut some discretionary items. This trend is causing advertisers to spend less money marketing their products and services.