Google 2023 Layoffs: 12K Job Cuts, $2.1B Expense

Alphabet, the parent company of Google, disclosed its financial results for the fourth quarter and full year of 2023, revealing a strategic workforce reduction of over 12,000 employees. This initiative, aimed at optimizing resources for priority areas such as artificial intelligence (AI), incurred severance and related expenses totaling $2.1 billion. The company's meticulous examination of operational efficiency has led to a continued focus on cost-cutting measures, resulting in additional layoffs anticipated throughout the current year.

As of December 31, 2023, Google's workforce experienced a 4% reduction compared to the same period in 2022, with a remaining staff count of 182,502. In January 2024, Google implemented further workforce adjustments across various departments, including hardware, development engineering, voice assistants, YouTube, and X Lab. Sundar Pichai, CEO of Alphabet, indicated during the earnings conference call that multiple rounds of layoffs may be executed in the coming months.

Alphabet's Chief Financial Officer, Ruth Porat, provided insights into the financial implications of these actions, citing severance and related expenses of $2.1 billion for the entire year of 2023, with an estimated $700 million for the first quarter of 2024. The financial report for the fourth quarter ending on December 31, 2023, showcased impressive figures, with a revenue of $863.1 billion, marking a 13% year-over-year increase and exceeding the expected $853.3 billion by LSEG. Net profit reached nearly $206.9 billion, representing a substantial 52% year-over-year growth, with diluted earnings per share at $1.64, surpassing projections by both LSEG and the previous year's performance.

Breaking down the specific business segments, search advertising revenue amounted to $480.2 billion, reflecting a 12.7% year-over-year increase. YouTube advertising revenue achieved $9.2 billion, a commendable 15.5% year-over-year growth, meeting the expectations outlined by StreetAccount. Google Cloud demonstrated robust performance with revenue close to $91.9 billion, exhibiting a remarkable 25.7% year-over-year increase and surpassing StreetAccount's projected $89.4 billion. Notably, Google Cloud remains a pivotal growth engine for Alphabet, registering a 26% year-over-year revenue increase in the fourth quarter, with an operating profit of $864 million—twice the expectations of Wall Street analysts. Positioned as the third-largest global cloud services provider, Google Cloud follows industry leaders AWS and Microsoft Azure.

Traffic Acquisition Costs (TAC) for the period neared $13.99 billion, marking an 8.2% year-over-year increase, slightly below StreetAccount's anticipated $14.1 billion. The subscription, platform, and device division within Google generated $10.7 billion in revenue during the fourth quarter, showcasing a noteworthy 22.7% year-over-year growth, driven primarily by subscription services like YouTube Premium and Music, YouTube TV, Google One, and others.

For the full year of 2023, Alphabet's revenue reached approximately $3,073.9 billion, signifying a commendable 9% year-over-year increase. Net profit approached $738 billion, reflecting a substantial 23% year-over-year growth, with diluted earnings per share at $5.8, surpassing the previous year's performance of $4.56.