Alphabet, parent company of Google and YouTube, turned in fourth-quarter 2022 earnings that missed analyst estimates, as YouTube’s ad revenue again suffered a year-over-year decline.

Overall, Alphabet posted revenue of $76.05 billion, up just 1%, and net income of $13.62 billion (down 34% versus $20.6 billion in Q4 2021), or earnings of $1.05 per share. YouTube ad revenue was $7.96 billion in Q4, down 7.8% from $8.63 billion a year earlier.

Analysts expected YouTube advertising revenue to come in at $8.2 billion for the most recent quarter, per FactSet. Total revenue was pegged at $76.58 billion, with earnings per share of $1.19, according to Refinitiv.

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YouTube’s second consecutive quarter of year-on-year ad revenue declines “is extremely worrying and highlights the popularity of rival services such as TikTok and Facebook Reels with short-form content,” PP Foresight analyst Paolo Pescatore said.

Alphabet, along with other tech companies, recently announced layoffs to reduce costs. The tech giant last month said it was eliminating 12,000 jobs, or about 6% of its global workforce.

“We’re on an important journey to reengineer our cost structure in a durable way and to build financially sustainable, vibrant, growing businesses across Alphabet,” Sundar Pichai, CEO of Alphabet and Google, said in prepared remarks. He touted “great momentum” in Google’s Cloud segment, YouTube subscriptions (which the company does not break out in its earnings) and Google Pixel devices. In November, the company said YouTube Music and YouTube Premium subscriptions topped 80 million paying subscribers combined.

Pichai said YouTube Shorts, the platform’s TikTok-style video format, now averages more than 50 billion daily views, up from the 30 billion announced in early 2022. Creators of YouTube Shorts as of Feb. 1 were eligible for ad revenue sharing, under which they can receive a 45% split distributed based on their share of total Shorts views (compared with 55% for long-form videos under the core YouTube Partner Program).

Google Cloud revenue rose 32%, to $7.32 billion in Q4, while the segment narrowed its operating loss to $480 million, versus an operating loss of $890 million in the year-ago quarter.

The internet company said it expects to incur employee severance costs and related charges of between $1.9 billion and $2.3 billion, the majority of which will be recognized in the first quarter of 2023. In addition, Alphabet projected costs relating to office space reductions of approximately $500 million in Q1.

CFO Ruth Porat said the company has “significant work underway to improve all aspects of our cost structure.” Meanwhile, according to Alphabet, overall Q4 revenue would have grown 7% excluding the impact of foreign currency exchange rates.

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