Google drops 7% on revenue miss due to fizzling ad business

Google drops 7% on revenue miss due to fizzling ad business

Alphabet said its quarterly revenue rose 17 per cent from a year ago to $36.3 billion, compared with Wall Street's average estimate of $37.3 billion, according to IBES data from Refinitiv.

"We remain focused on, and excited by, the significant growth opportunities across our businesses", she said.

Speaking of expenses, part of that $29.7 billion number includes a $1.7 billion fine which Google had to pay to the European Commission for infringing on competition laws with AdSense and Google Search.

Quarterly costs rose about the same as revenue, up 16.5 per cent from previous year to $29.7 billion.

Operating margin, a closely watched profit metric, was 23 percent, excluding the antitrust fine. Alphabet's headcount meanwhile surged from about 85,000 to more than 103,000.

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In a call with investors late on Monday, Google's chief executive, Sundar Pichai, said the company would continue to invest more in algorithms to monitor content on YouTube, following recent incidents of the platform offering advertising slots alongside misinformation, hate speech and disturbing content targeting children. For comparison's sake, Q1 2018 saw an increase of 26%.

George Salmon, an equity analyst at Hargreaves Lansdown, said it's "a nasty combination of growth in traffic to Google ads slowing and lower revenue per click from those ads that's upset the market". Google's Other revenues - which include the company's enterprise cloud, software, and data management products - were $5.45 billion.

Alphabet also reported widening losses in its "Other Bets" category - a broad segment that includes experimental ventures such as self-driving vehicle business Waymo and internet-balloon subsidiary Loon. Paid clicks increased 39 percent year-over-year but decreased 9 percent sequentially.

Consultancy eMarketer anticipates that Google will generate $103.73bn in net digital ad revenue in 2019, representing about 31.1 per cent of the worldwide digital ad market. Facebook is at about 20 per cent.

"Google ad revenue growth has been slowing amid downward pressure on ad prices, especially for revenues coming from worldwide markets", Monica Peart, senior forecasting director for ad research firm eMarketer said in a statement. "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". Amazon and Microsoft are well ahead of Google in the cloud market. Analysts had expected $10.58. Ads for mobile devices bring in less money.

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