Alphabet Misses Revenue in Q4 on Slowing Advertising Growth
By Yasin Ebrahim
Investing.com - Alphabet (NASDAQ:GOOGL) reported on Monday fourth-quarter earnings that beat analysts' forecasts, but revenue fell short amid slowing growth in its core advertising business.
Alphabet (NASDAQ:GOOGL) announced earnings per share of $15.35 on revenue of $46.08 billion. Analysts polled by Investing.com anticipated EPS of $12.50 on revenue of $46.91 billion.
That compares to EPS of $12.77 on revenue of $39.28 billion in the same period a year before. Alphabet had reported EPS of $10.12 on revenue of $40.5 billion in the previous quarter.
The company’s core advertising business grew 16% to $37.9 billion, slower than the 20% growth from last year’s fourth quarter.
Cost per click on Google properties -- the amount Alphabet charges advertisers for each ad placed on its web sites -- grew 18% from last quarter, underpinning hopes that Google’s pricing power for ads has steadied, following a wobble last year.
Against calls from investors for the company to provide more insight into the performance of its businesses, Alphabet provided growth metrics for its cloud business, search and YouTube.
“In 2019 we again delivered strong revenue growth, with revenues of $162 billion, up 18% year over year and up 20% on a constant currency basis,” said Ruth Porat, chief financial officer of Alphabet and Google. “To provide further insight into our business and the opportunities ahead, we’re now disclosing our revenue on a more granular basis, including for Search, YouTube ads and Cloud.”
Google cloud revenue surged 53% $32.52 billion for the quarter year on year, YouTube grew 31% and search was up about 17%.
Operating income was $9.27 billion for the quarter, below consensus estimates of the $9.86 billion consensus on margin growth of 20%, short of estimates of 21%.
"Alphabet’s earnings show no sign that spending on digital advertising is slowing," Investing.com analyst Haris Anwar said. "With more than 90% of all internet searches taking place through Google and its subsidiary, YouTube, the company is in a unique position to leverage that dominance."
"Another reason to remain optimistic is that the company is at the forefront of new technology innovations that will fuel future growth and could help diversify its revenue away from the ad business,' Anwar said. "In particular, self-driving car technology presents the greatest opportunity of all for Alphabet."
Alphabet (NASDAQ:GOOGL) shares are up 10% from the beginning of the year, still down 1.17% from its 52-week high of $1,500.58 set on January 22. They are outperforming the Nasdaq which is up 2.59% year to date.
Alphabet (NASDAQ:GOOGL) lost 4.5% in after-hours trade following the report.
Stay up-to-date on all of the upcoming earnings reports by visiting Investing.com's earnings calendar
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