Sluggish corporate advertising spending is wreaking havoc on Alphabet's balance sheet. Although the Google parent increased its sales in the last quarter, profits fell significantly.
In the past quarter, Google has clearly felt the frugality of advertisers. The turnover of the parent company Alphabet increased year-on-year by only six percent to a good 69 billion dollars. The bottom line is that profits fell from 18.94 to around 13.9 billion dollars, as Alphabet announced after the US market closed.
What was striking was the decline in advertising revenues from the video platform YouTube, which fell from 7.2 to 7 billion dollars year-on-year. In recent years, YouTube has been one of the driving forces behind Google's growth - and it was the first decline since the company started breaking down the numbers. Meanwhile, the operating profit of Google services as a whole fell from almost 24 to 19.8 billion dollars.
Sales in the cloud business advanced from just under 5 to around 6.9 billion dollars. However, the division's operating loss also widened from $644 to $699 million. Alphabet shares fell by around 6 percent in after-hours trading. In view of the high inflation and concerns about the economy, it had already become apparent that advertising customers would step on the brakes with their spending. Competitors like Facebook and Snapchat have also been affected.
