Google Beats Earnings Expectations But Shares Still Slide Nearly 5%

On Monday, Google’s parent company Alphabet reported Q4 earnings after market close.

Google’s parent company Alphabet released its highly anticipated fourth-quarter earnings on Monday. Plus, the company released its YouTube and Cloud revenue for the first time.

The results beat analyst expectations, but the company’s stock still fell in after-hours trading. Let’s look more at how things went for Google during the previous quarter and what to expect going forward.

Google beats earnings estimates during Q4

During the fourth quarter, Google’s earnings reached $15.35 per share, which is well over expectations of $12.53 per share. The company brought in $46.08 billion in revenue, which did fall short of forecasts of $46.94 billion. 

And for the first time, Alphabet released its full-year revenue from its Cloud and YouTube businesses. In 2019, YouTube ads brought in $15.15 billion, which is up from $11.16 billion in 2018. And the company’s Cloud business generated $8.92 billion in revenue, which is up from $5.84 billion in 2019. 

Google’s advertising revenue continues to make up the bulk of its revenue, and it came to $37.93 billion during the fourth quarter. This is up from $32.63 billion a year earlier. 

The company’s “other revenue” segment grew as well, which includes things like Pixel phones and cloud products. And the company’s traffic acquisition costs fell right in line with Wall Street’s expectations at $8.50 billion. 

Bottom line

Google’s stock has been performing well over the past month, and just recently, the stock passed the trillion-dollar market cap. This was largely due to the decision to replace former Google CEO Larry Page with Sundar Pichai.

The company faced a major leadership shake-up at the end of 2019. Not only did Page step down as CEO, but former President Sergey Brin stepped down and David Drummond resigned as Chief Legal Officer. Drummond was the subject of an ongoing misconduct investigation. 

And Alphabet still has to deal with antitrust probes from the Justice Department. Last year, the company’s YouTube subsidiary paid a $170 million FTC fine over claims that it violated child privacy laws.
Hopefully, Pichai will be able to lead the company in a new direction of transparency going forward. The company is considered to be a strong buy on Wall Street.

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