Alphabet Shares Lower; YouTube Ads Pressured by Ukraine War
27 April 2022 - 04:56PM
Dow Jones News
By Michael Dabaie
Alphabet Inc. shares were down Wednesday after the parent
company of Google reported quarterly earnings and said YouTube
advertising felt an outsized impact from the war in Ukraine.
Class A shares fell 4.5% to $2,266.67 and class C shares were
down 4.5% to $2,283.80 in morning trading.
The company after the closing bell Tuesday reported an increase
in first-quarter revenue to $68 billion, just shy of the FactSet
consensus forecast for $68.1 billion.
Earnings per share fell to $24.62, missing the FactSet consensus
for $25.77.
YouTube ad revenue increased to $6.87 billion, but came up short
of the FactSet consensus for $7.47 billion.
The war in Ukraine "did have an outsized impact on YouTube ads
relative to the rest of Google, and that was both from suspending
the vast majority of our commercial activities in Russia, as well
as...the related reduction in spend primarily by brand advertisers
in Europe," Chief Financial Officer Ruth Porat said during the
company's conference call.
Google Search and other advertising revenues of $39.6 billion in
the quarter were up 24%, led again by retail followed by a
continued recovery in travel, Ms. Porat said in the call. The
FactSet consensus was for $39.4 billion.
Google Cloud revenue was $5.82 billion, above the FactSet
consensus for $5.75 billion.
"Although YouTube results came in below expectations due to a
pullback in ad spend in Europe following the conflict in Ukraine as
well as Google's suspension of operations in Russia, Search was
relatively in-line, [Google Cloud Platform] continues to deliver
strong growth, and operating margins came in better than expected,"
Citi analysts said in a research report.
The Citi analysts said they lowered projections to account for
some of the specific challenges at YouTube and the risk of a
broader macro slowdown overall, but are encouraged by factors like
strength in the Retail and Travel verticals in Search.
J.P. Morgan analysts Doug Anmuth and Dae Lee pointed to
increasing competition from TikTok or others in the short-form
video space. The analysts said in a research note that it seems
likely that TikTok is becoming a bigger headwind to engagement, and
to a lesser degree monetization.
Write to Michael Dabaie at michael.dabaie@wsj.com
(END) Dow Jones Newswires
April 27, 2022 10:41 ET (14:41 GMT)
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