Shares in Google and Youtube owner Alphabet Inc (NASDAQ:GOOG) are expected to fall today as the war in Ukraine hit online ad sales.
First-quarter revenues of US$68.0bn were up 26% on a constant currency basis, short of Wall Street expectations, with profit up 22% to US$20.1bn.
What was notable, said analysts, was that this was the first quarter since the Covid pandemic two years ago where the company's earnings were not miles ahead of consensus estimates.
Chief financial officer Ruth Porat said the war in Ukraine had an "outsized impact" on YouTube as ad sales were paused in Russia and brands in Europe curtailed spending, adding it was too early to say when sales may pick up again.
YouTube, also hit by Apple's privacy initiatives, fell short of expectations, with growth of 14% compared to the 25% expected.
Overall sales at Google Services, which includes Google Search and YouTube ads, rose by US$10bn to US$61.5bn, with total ad revenue rising 22% to US$54.7bn. Traffic acquisition costs rose 23.5% to US$12bn.
Revenues at the Cloud business surged 44% to US$5.8bn, with operating losses narrowing 4.4% to US$931m.
The board authorized a new US$70bn share buyback, with free cash flow of US$15.3bn generated in the quarter to leave net cash at US$119.2bn at the end of March.
"The read-throughs from YouTube don't bode well for Facebook and the rest of advertising in our view," said analyst Ygal Arounian at broker Wedbush.
Arounian noted that the Cloud business continues to perform "and is a key area of strength in tech at the moment that is not being as impacted by the macro".