It reported revenue of nearly $69.1 billion, up just 6% from a year earlier. Google’s ad revenue grew just 2.5% year over year, compared with a 43% increase a year ago. YouTube’s ad business, which competes with TikTok, has been hit especially hard, with revenue down nearly 2% year over year.
Meanwhile, Google’s net income was $13.9 billion, down more than 26% from the previous year and well below analysts’ forecast of $16.6 billion.
Shares in the company fell nearly 6% in after-hours trading on Tuesday after the report.
Sundar Pichai, chief executive of Alphabet and Google, echoed the tougher economic environment in a statement included in the results.
“We’re stepping up our focus on a clear set of product and business priorities,” Pichai said. “We are focused on responsible long-term investing and responsiveness to the economic environment.”
Tech companies, including Google, reported that they were starting to feel the effects of a drop in online ad spending last quarter. High inflation, looming recession fears and the ongoing war in Ukraine continue to weigh on the industry.
Growth in Google’s other business areas also appears to be slowing. Google Cloud revenue rose 37% year over year, a slowdown from a nearly 45% increase a year earlier, and the unit’s net loss widened to $699 million from $644 million a year earlier.
Jesse Cohen, senior analyst at Investing.com, said: “Google’s quarterly results were disappointing, with the search giant underperforming our expectations in nearly every business segment, most importantly its core ad search division.”