Google’s promoting income slipped 4 per cent within the last quarter of final 12 months, marking solely the second quarterly contraction within the firm’s historical past, in response to figures launched late on Thursday.

The promoting decline adopted a pointy slowdown in Google’s enterprise final 12 months as financial development weakened and the pandemic-fuelled growth in digital providers receded. It left mum or dad Alphabet with general income development of just one per cent, in comparison with the 32 per cent surge in enterprise it registered the 12 months earlier than. Income would have grown 7 per cent had it not been for the strengthening US greenback.

The information pointed to a fair sharper deceleration than many analysts had anticipated and left the corporate’s shares down about 4 per cent in after-market buying and selling.

Google additionally reported a slip in its working revenue margin as value development outran revenues, leading to a 32 per cent fall in earnings per share, to $1.06. Wall Road had been anticipating earnings of $1.18 a share.

The newest figures are prone to intensify Wall Road’s concentrate on Alphabet’s prices. Final month, it introduced 12,000 job cuts, although it nonetheless got here beneath hearth from an activist investor for not taking extra drastic motion.

The corporate was “on an necessary journey to re-engineer our value construction in a sturdy approach”, chief govt Sundar Pichai stated in an announcement forward of a name with analysts.

Alphabet stated it anticipated to incur prices of $1.9bn-$2.3bn on account of the job cuts and one other $500mn from lowering its workplace area, most of it within the first quarter of this 12 months.

Google executives sought to make use of the corporate’s earnings name with analysts to reassure Wall Road that they had been racing to launch a brand new spherical of AI providers. In his first public feedback since ChatGPT introduced a problem to its search enterprise, Pichai stated Google would act “very quickly” to provide customers a approach to “work together straight with our latest, strongest language fashions . . . in experimental and progressive methods”.

In one other signal that Alphabet is refocusing its investments round AI, chief monetary officer Ruth Porat stated the monetary outcomes of UK analysis arm DeepMind can be taken out of the Different Bets division and handled as a substitute as direct company bills. The transfer, which appeared to level to a more in-depth integration of DeepMind into the remainder of Alphabet, mirrored the truth that its work had change into necessary to many components of group’s enterprise, Porat stated.

Income development from cloud computing slowed to 32 per cent within the fourth quarter of final 12 months, down from 38 per cent within the previous three months — a sharper deceleration than most analysts had anticipated. Promoting on YouTube, which is extra uncovered to an financial slowdown than the search enterprise, fell 8 per cent after registering a 2 per cent decline within the third quarter.

Google’s first-ever income fall got here at the beginning of the Covid-19 disaster, as many advertisers suspended their advert budgets, however development rebounded strongly as digital spending boomed through the pandemic.