Alphabet Inc, a Google parent firm, revealed its first quarterly profit shortfall of the year on Tuesday, citing a drop in YouTube ad revenues as a reason, sending investors into a spiral as the global economy falters.
As the pandemic brought more stores and people online, the world's leading engine and video source gained a fortune during the last two years.
However, market observers say that surpassing those sales has been challenging so far this year, with the conflict, rising inflation, and product scarcity leading advertisers to abandon marketing initiatives.
Ruth Porat, Alphabet's Chief Financial Officer, claimed it was too early to say when revenues affected by the war would recover, and she cautioned that the strengthening currency will harm sales even more in the latest quarter.
Alphabet's stock, which had risen about 90% in the previous two years, dipped by 2.5% when the data were released late Tuesday. During the normal session, they had fallen by 3.6%.
Aptus Capital Advisors fund manager David Wagner expressed rising concerns about the macro situation.
"Alphabet has been regarded as among the most protected corporations in the advertising industry in comparison to competitors," he continued, "but sometimes you might own the greatest property in the worst neighborhood."
Alphabet reported first sales increased by 23% year over year to $68.01 billion but fell short of the mean analyst forecast of $68.1 billion, the company's first shortfall since the fourth quarter of 2019.
According to FactSet, YouTube ad revenues of nearly $7 billion fell short of experts' expectations of $7.5 billion.
The crisis in Ukraine, which began this year, had an "outsized impact" on YouTube profits, according to Porat, because the business ceased selling ads in Russia, and major advertisers, notably in Europe, cut back on expenditure when the war began.
Porat estimates that Russia accounted for 1% of Google's worldwide sales last year.
She also stated that revenues to direct-response marketers on YouTube were slowing and that antitrust concerns had caused app store charges to be reduced, resulting in a loss of subscription profits.
Google's "alternative" revenue, which comprises app, hardware, and subscription purchases, was $6.8 billion, slightly lower than the $7.3 billion forecasts.
Quarterly earnings were $16.44 billion, or $24.62 per share, which fell short of analysts' forecasts of $25.76 per share.
Alphabet also announced that its board of directors has approved an extra $70 billion in share repurchases. Nearly the last two years, it has purchased over $81 billion in stock.
