Google parent Alphabet reported lacklustre fourth-quarter results, signalling how hard the slowdown in digital advertising is hitting the massive company.

Sales were A$89 billion in the fourth quarter, slightly beneath Wall Street consensus of A$89.3 billion.

YouTube advertising revenue dropped 8 per cent from the same period the year prior, to A$11.25 billion.

Revenue from Google Search and ‘Other’ fell 2 per cent, to A$60.2 billion, another sign of slowing ad spend due to economic uncertainties.

Google Cloud brought in A$10.34 billion, up 32 per cent from the prior quarter – albeit lower than Wall Street estimations.

In addition, operating expenses leaped 10 per cent to A$31.8 billion, due to headcount growth (Alphabet added 3,455 people during the quarter), legal tussles, and a pull-back of advertising.

The company dropped a further A$2.1 billion on equity securities during the quarter.

Alphabet will also take a first-quarter charge of between A$2.7 billion and A$3.25 billion related to the 12,000 redundancies it announced last month, and a A$706 million hit related to reduced office space.

Ruth Porat, CFO of Alphabet and Google, admitted: “We have significant work underway to improve all aspects of our cost structure, in support of our investments in our highest growth priorities to deliver long-term, profitable growth.”

Shares are down 3.9 per cent in after-hours trading.