Google stock drops amid slowing ad-revenue growth

Google stock drops amid slowing ad-revenue growth

That figure doesn't include an expected charge of $1.7 billion to account for a European Union antitrust fine. This compares to the year-ago quarter when earnings came to $13.33 per share on revenue of $31.15 billion.

Wall Street had been expecting Alphabet to report revenue of $37.3 billion. The growth moderated from last quarter as Alphabet had warned in February.

Google has had a tough first quarter in 2019.

Income also was boosted by a change in valuation of Alphabet's stake in ridesharing app Lyft Inc, which held an initial public offering a month ago.


Shares of Alphabet have gained 23 per cent this year, the least growth among the so-called FAANG group, with Facebook at 48 per cent, Netflix at 39 per cent, Apple at 30 per cent and Amazon at 29 per cent. Mobile search and YouTube were substantially responsible for revenue growth, which was up 17 percent year-over-year.

Shares are down 7.8% in pre-market trading to US$1,195.20, wiping nearly US$800mln from the company's market capitalisation.

While Alphabet's adjusted earnings per share for the period was notable, the rare revenue miss took the Street by surprise, especially since the miss was so substantial. "The company was still experiencing tailwinds at this time last year, and is now experiencing headwinds on ad prices, making for a less rosy year-over-year comparison".

The growth was the slowest since 17 per cent in the first quarter of 2016 and compared with 26 per cent for the same quarter in 2018. But if revenue growth decelerates meaningfully and consistently in the coming quarters, investors may need to revisit their growth expectations for the company.


The Google advertising business brought in %30.7 billion, compared to $26.4 billion in the same quarter a year ago. At last month's annual Cloud Next conference, he insisted that "cloud is one of the most important investment areas for Google" and promised that "we are in it for the long haul". Google's other revenue, which includes the cloud business, rose 25 percent to $5.45 billion.

"We see strong momentum", Google CEO Sundar Pichai said. The company doesn't break out YouTube and cloud revenue, but the two are important sources of future growth.

Google's search share is predicted to be even more dominant, by eMarketer's measure, accounting for 61.1 per cent of the $141.21bn global search market.

On top of a series of announcements at Cloud Next, in particular aimed at companies that want to use Google's cloud in conjunction with their own data centers in a "hybrid" or multicloud arrangement, Google today announced that Nvidia Corp.'s powerful T4 graphics processing unit chips for machine learning and other demanding computing workloads are now available for use in eight cloud regions.


Alphabet's "other bets" category, which includes the self-driving vehicle company Waymo and the digital health company Verily, generated a small $170 million of profit. Analysts were looking at revenues of $172.2 million. And all of them continue losing money: Alphabet reported that its "other bets" delivered a quarterly operating loss of $868 million on revenues of just $170 million.

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