Alphabet's revenue for the first quarter fell short of expectations, causing the tech giant's shares to lose -5% during after-hours trading Monday.
Google’s parent company reported revenue of $36.34 billion for the quarter, compared to the $37.3 billion expected by analysts polled by FactSet.
Decelerating growth in advertising was a headwind to the company's revenue. Paid clicks on Google properties grew +39% year-over-year for the quarter, which was much slower than the fourth quarter’s + 66% and third quarter’s + 62%.
However, total revenue was still +17% higher compared to the year-ago quarter, as mentioned by Ruth Porat, Chief Financial Officer of both Alphabet and Google. The growth came in at +19% on a constant currency basis. Porat emphasized mobile search, YouTube, and Cloud as major drivers of growth. The company’s hardware and cloud businesses (included in Google’s “other revenues” segment), saw a +25% year-over-year growth to $5.45 billion. Porat indicated that Youtube clicks continued to grow, albeit at a slower pace compared to the same quarter in the preceding year.
Alphabet’s earnings of $11.90 per share managed to beat analysts’ estimates of $10.60 per share.
But net income of $6.66 billion for the period fell sharply from the year-ago quarter’s profit of $9.4 billion.
The European Commission had slapped a $1.7 billion fine on Alphabet as a settlement for alleged anti-competition practices in the online ad business. Excluding the fine, the company’s operating income rose +26% to $8.31 billion.