Alphabet delivers better-than-expected Q4 revenue

06 February, 2019, 05:26 | Author: Corey Lynch
  • Alphabet Blows Away Q4 Earnings Estimates Shares Fall

Revenue-wise, Alphabet is still an advertising company, despite its investment in cloud and other business. "But with talk of economic pressures on the horizon in the USA, noticeable sluggishness in their fourth-quarter performance could warn of more dramatic slowdowns in the digital advertising market, which had been relatively insulated while the ad giant enjoyed strong double-digit growth rates". Chief financial officer (CFO), Ruth Porat, said that the capital expenditure (capex) will help Alphabet's growth.

Alphabet Inc's fourth-quarter revenue and profit beat Wall Street's expectations on Monday but sharply higher spending, as it added data centres, cloud engineers and marketed its services heavily during the holidays, anxious investors.

Overall, Google's revenue for the quarter was $39.1 billion, up 22% from the $32.2 billion recorded during the 2017 fourth quarter.

FILE PHOTO - The Google name is displayed outside the company's office in London, Britain November 1, 2018.

Alphabet's traffic acquisition costs - such as the fee it pays Apple to be the default browser on the iPhone - clocked in at $7.4 billion, just under Wall Street's predicted $7.6 billion and a 15 percent jump from past year.

On the other hand, however, are the negatives: fees that the company has to pay Google and Apple to remain their default search engine were also up in the same time period.

All eyes are on Thomas Kurian, the recently hired cloud services executive who's attempting to turn the Google Cloud Platform into an enterprise business. Last week, Alphabet shares rose to the highest levels since October after scandal-plagued rival Facebook Inc. New privacy rules in Europe may have limited this data harvesting slightly, but that's hit smaller competitors more than the two digital giants.




But Alphabet did not provide specifics on the numbers of those big contracts, or total Google Cloud revenue compared with previous years.

YouTube's ad revenue will grow almost 20% this year to $11.38 billion worldwide.

Google's cloud unit is laboring through a management transition as well. But those Other Bets brought in just $154 million in revenue in the past 90 days; Google's advertising business makes the same amount of money about every eight hours.

While Alphabet had a mostly positive earnings report, there were misses for the tech company. Operating losses were $1.33 billion.

"Everything we do at Google is united by the mission of making information accessible and useful for everyone", said CEO Sundar Pichai during the earnings call.

"Acquisitions are an attractive complement to what we do to drive organic growth", Porat said on Monday.

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