Growth is Slowing at Google as Advertisers Pull Back on Their Spending

Google parent Alphabet's third quarter earnings missed expectations, and quarterly revenue grew at its slowest pace since 2013, with the exception of one period early in the pandemic.

Alphabet CEO Sundar Pichai.
Alphabet CEO Sundar Pichai.
Hindustan Times via Getty Images

Alphabet had net earnings of $13.9 billion, or $1.06 per share, on $69 billion of revenue for the three months ended on Sept. 30, the company reported today (Oct. 25). The quarterly profit represents a 26 percent decline from a year ago, showing the pain of an industrywide slowdown of advertising spending this year. Revenue grew 6.1 percent on a year-over-year basis, marking the slowest pace since 2013 (with the exception of one quarter at the beginning of Covid-19 pandemic.)

Both earnings per share and revenue missed Wall Street estimates. Analysts were expecting net earnings of $1.25 per share and revenues of $70 billion.

Alphabet share price fell more than 6 percent after the market’s close.

Google Search revenue grew 4 percent from a year ago to $39.5 billion for the quarter, while advertising revenue from YouTube fell 2 percent year-over-year to just above $7 billion, missing analysts’ expectation of $7.47 billion.

Another major chunk of Alphabet’s business, Google Cloud, fared better than expected, reporting $6.87 billion in quarterly sales versus the estimated $6.6 billion.

Operating margin, a key measure of profitability, was 25 percent, compared with last year’s 32 percent. Analysts were expecting 28 percent for the most recent quarter. Growth is Slowing at Google as Advertisers Pull Back on Their Spending