What you need to know
- Alphabet reported its Q3 2022 financial earnings, with just over $69 billion in revenue.
- Revenue growth continues to slow year-over-year compared to Q3 2021, while YouTube revenue falls.
- Alphabet CEO Sundar Pichai is confident based on recent announcements regarding Search and YouTube.
Google's parent company, Alphabet, released its third-quarter 2022 financial earnings on Tuesday. The company managed just over $69 billion in revenue, representing a 6% year-over-year growth but slightly lower than Q2 revenue.
One of the most notable losses is in YouTube ads, which brought in just over $7 billion in revenue, compared to last quarter's $7.34 billion and $7.2 billion during the same period the previous year. Alphabet noted during its Q2 report that advertisers were reducing spending on YouTube, which it reiterated during Tuesday's earnings call. Despite this, Alphabet CEO Sundar Pichai expresses that he has a positive outlook based on recent company announcements.
"We're sharpening our focus on a clear set of product and business priorities," Pichai said in a statement. "Product announcements we've made in just the past month alone have shown that very clearly, including significant improvements to both Search and Cloud, powered by AI, and new ways to monetize YouTube Shorts. We are focused on both investing responsibly for the long term and being responsive to the economic environment."
Youtube was the biggest disappointment, down 2% yy, which is 5% below the Street.Search grew 4% yy but missed estimates by 4%. That compares to 14% growth last quarter.October 25, 2022
Google recently announced that it's opening its YouTube Partner Program to Shorts creators, which may help it compete with services like TikTok by attracting more creators. Google also held its Search On event, where it announced various updates to Search and how it's expanding the ways consumers can discover and shop for new products.
During the earnings call, Pichai noted that the company saw "delivered solid growth and hardware revenues primarily from sales of the Pixel 6a," which launched over the summer. He also highlighted more recent hardware launches, such as the Pixel 7 and Pixel Watch devices that launched this month and will contribute some to Alphabet's Q4 revenue, although Google's hardware revenue is only a fraction of what it gets from ads. Still, Google's "Other" revenue grew to $6.8 billion compared to last year. "We recently had our highest-selling week ever for Pixel and I'm really proud of the positive reviews so far."
Pichai continues to note how Alphabet is focused on becoming more efficient by making "several shifts away from lower priority efforts to fuel higher growth priorities." This likely underscores recent changes, such as shutting down Stadia and winding down projects in Area 120. The company has also reportedly canceled the long-awaited Pixelbook successor, which some fans were looking forward to. That said, the company appears focused on solidifying its Pixel ecosystem by expanding into new devices, like the upcoming Pixel tablet.
