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Google Earnings Beat Expectations, but Stock Falls

This article was originally published on ETFTrends.com.

Alphabet, the parent company of Google, bested fourth-quarter earnings expectations, but the stock fell amid worries regarding the costs of digital advertising prices and declining margins.

Final earnings report figures:

  • Earnings: $12.77 per share versus $10.82 according to Refinitiv consensus estimates
  • Revenue: $39.28 billion versus $38.93 billion according to Refinitiv consensus estimates
  • Traffic acquisition costs: $7.44 billion versus $7.62 billion according to StreetAccount

Despite the earnings beat, shares of Google fell 3 percent in after hours trading and is down under 1 percent as of 11:00 a.m. ET.

"Everything we do at Google is united by the mission of making information accessible and useful for everyone. Providing accurate and trusted information at the scale the Internet has reached is an extremely complex challenge and one that is constantly getting harder," said CEO Sundar Pichai during the earnings call.

ETFs with the largest Google holdings, however, edged higher.  Vanguard Communication Services ETF (VOX) was up 0.23 percent, while Fidelity MSCI Communication ServicesETF (FCOM) rose 0.33 percent and Communication Services Select Sector SPDR ETF (XLC) ticked 0.58 percent higher.

However, capital expenditures exceeded $7 million while the company reported an operating margin of 21 percent, which was lower than the 22 percent expected. The full-year operating margin also fell by 2 percentage points compared to the same time last year.

Nonetheless, the company grew revenue in other areas, such as its Google Cloud Platform.

"Last year we more than doubled both the number of Google Cloud Platform deals over 1 million as well as the number of multiyear contracts signed," Pichai said. "We also ended the year with another milestone passing 5 million paying customers for our Cloud collaboration and productivity solution G Suite."

Additionally, this "other revenue" segment accounted for $6.49 billion, which beat estimates of $6.43 billion.

"One of the things that was evident towards end of last year is now our ability to win very large customers, global 5000 companies with multiyear contracts. And so that's definitely something we want to focus on," Pichai said. "I think Diane and Thomas have been working closely under transition with a lot of continuity."

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