Google-parent Alphabet announces Q3’23 results, cloud business continues to slow, stock drops over 6%

Alphabet, the parent behind Google and all associated businesses, released numbers for Q3-2023. And while CEO Sundar Pichai may have officially stated to be “pleased” with the financial results, the street thinks otherwise. As Google Cloud continued to show a slowing growth for fourth consecutive quarter, Alphabet’s stock price nose dived by over 6% in after-hours trading.

Overall, Alphabet recorded revenues of $76.6Bn in Q3 2023, an 11% year-on-year uptick compared with previous year. Operating income stood at $21.3Bn, a 28% increase from last year. All divisions showed growth, though it was Google Cloud that continues to hurt the most. Growth in the cloud division has slowed down to crawling pace, even as Microsoft and Amazon continue to show a surge in the same division. Google Cloud third-quarter revenue rose 22.5% to $8.41 billion, the slowest growth since at least the first quarter of 2021. The cloud unit reported a operating income of $266 million, compared with an operating loss of $440 million a year ago.

Ruth Porat, President and Chief Investment Officer; CFO said: “The fundamental strength of our business was apparent again in Q3, with $77 billion in revenue, up 11% year over year, driven by meaningful growth in Search and YouTube, and momentum in Cloud. We continue to focus on judicious capital allocation to deliver sustainable financial value.”

Ads continue to throw in decent numbers for Google and other platforms as companies spend aggressively in marketing post-COVID. Alphabet posted ad revenues of $59.65 billion in the third quarter, compared with $54.48 billion a year earlier. According to Reuters, analysts on average had expected $59.12 billion in revenue from its advertising business. Within the company’s advertising segment, YouTube ads reported revenue of $7.95 billion compared with $7.07 billion last year.

Combined, Alphabet reported a net profit of $19.69 billion for the July-Sept. period, compared with $13.91 billion a year earlier.