Google’s parent company, Alphabet, recently released its third-quarter earnings report. The results show that Google Search generated $44.03 billion in revenue, representing an 11.3% increase compared to the previous year. Additionally, YouTube’s ad revenue exceeded expectations, reaching $7.95 billion, a year-over-year gain of 12.5%. Sundar Pichai, CEO of Alphabet and Google, highlighted that YouTube Shorts, the vertical videos competing with TikTok, experienced a significant increase in daily views, rising from 50 billion to 70 billion during the quarter.
Overall, Google’s advertising revenue for the quarter totaled $59.65 billion, a 9.5% growth from the previous year’s $54.48 billion. Other revenue, which includes Google Pixel devices, increased by 20% year-over-year, reaching $8.34 billion compared to $6.9 billion last year. However, Google’s Cloud Services fell short of Wall Street expectations, generating $8.41 billion in revenue instead of the anticipated $8.64 billion.
Google’s costs to acquire traffic rose by 6.8% to $12.64 billion from $11.83 billion. The total revenue for the quarter was $76.7 billion, a notable increase from the $69.1 billion reported in the third quarter of 2022, representing an 11% gain. Net income also rose significantly by 42%, from $13.91 billion to $19.69 billion, and diluted earnings per share stood at $1.55, surpassing both last year’s $1.06 in Q3 and the forecasted $1.45 by Wall Street analysts.
The headcount at Google decreased by 2.4% year-over-year, reflecting job cuts, with the number of employees dropping from 186,779 to 182,381 during the third quarter compared to the previous year. Sundar Pichai expressed satisfaction with the financial results and product developments achieved in the quarter, emphasizing the advancements in AI-driven innovations across Search, YouTube, Cloud, Pixel devices, and more. Pichai promised continuous efforts to enhance the helpfulness of AI, with exciting progress and future developments to come.
Ruth Porat, who has held the CFO role for the past eight years, will transition to the position of chief investment officer. She acknowledged the fundamental strength of the business in the third quarter, citing $77 billion in revenue, an 11% year-over-year increase attributed to significant growth in Search, YouTube, and Cloud. Porat affirmed the company’s commitment to prudent capital allocation for delivering sustainable financial value.
The miss in Cloud Services revenue, amounting to $20 million, adversely affected Wall Street, causing Alphabet’s shares to decline by $8.50 or 6.07% to $131.62 in after-hours trading. Earlier, the shares had concluded the regular trading session at $140.12, exhibiting an increase of $2.22 or 1.61%.
