Alphabet Inc Class A (NASDAQ:GOOGL) stock fell 1.06% (As on February 3, 11:05:14 AM UTC-4, Source: Google Finance) after the company posted lower than expected results for the fourth quarter of FY 22. Google advertising, Google services, and YouTube all missed expectations as the core-ad business continues to show signs of a slowdown. Google Services revenues of $68 billion were down 2% year-on-year, negatively affected by sizable foreign exchange headwind. In Google advertising, Search and Other revenues were down 2% year-over-year, and YouTube Ads and Network had high single-digit revenue declines. Google Other revenues were up 8% year-over-year, with strong growth in YouTube, non-advertising and hardware revenues, offset by a decrease in Play revenues. In YouTube and Network, the year-over-year revenue declines were due to a broadening of pullbacks in advertiser spend in the fourth quarter.

GOOGL in the fourth quarter of FY 22 has reported the adjusted earnings per share of $1.05, missing the analysts’ estimates for the adjusted earnings per share of $1.18. The company had reported the adjusted revenue growth of 10 percent to $76.05 billion in the fourth quarter of FY 22, missing the analysts’ estimates for revenue of $76.07 billion. The total cost of revenues was $35.3 billion, up 7%. Other cost of revenues of $22.4 billion were up 15%. The increase was driven by two factors. First, hardware costs due primarily to $1.2 billion in inventory related charges, and secondarily, to strong unit sales. The charges reflect ongoing pricing pressures and changes in expected future inventory needs. Second, costs associated with data centers and other operations. Operating expenses were $22.5 billion, up 10%, reflecting an increase in R&D expenses, primarily driven by headcount growth, followed by an increase in G&A expenses, primarily reflecting an increase in charges related to accrued legal matters. Operating income was $18.2 billion, down 17% versus last year, and the operating margin was 24%. Net income was $13.6 billion. The company delivered free cash flow of $16 billion in the fourth quarter and $60 billion in 2022. The company ended the year with $114 billion in cash and marketable securities. The company also repurchased a total of $59 billion of our Class A and Class C shares in 2022.

The company reiterates the positive outlook on GOOGL – it continues to see Alphabet as the leading collection of AI/machine learning-driven businesses in the coverage universe and view the company as uniquely positioned to capitalize on the blurring of the lines between advertising, commerce and media consumption business models in the years ahead.