The disappointing stats follow weaker results for Facebook while Amazon, Apple keep growing
The final quarterly earnings report for the FAANG group of tech firms has brought further disappointment for investors.
While recent reports from Apple and Amazon beat analysts’ expectations for the most recent quarter, while Netflix was roughly in line with predictions; Facebook has been joined by Google parent Alphabet Inc. at the weaker end.
Alphabet shares dropped 4% in extended trading Monday as the results showed slowing search advertising for Google (up 17% year-over-year, which is a slowdown from the 20% growth seen a year earlier); and disappointing new sales for YouTube (up 36% year-over-year to $15.1 billion but less than expected).
Overall revenue, excluding payments to partners, was $37.6 billion in the fourth quarter, less than analysts’ projections of $38.4 billion according to Bloomberg.
Google’s search advertising business is facing challenges from other online advertising platforms, especially social media, an area that the firm has failed to capture.
YouTube has been under pressure in the past year from critics of its response to inappropriate material and this includes advertisers’ unhappiness with their ads appearing alongside undesirable content.
Upbeat response
While the numbers are not what analysts and investors were hoping for, the firm’s core business areas are still growing and Sundar Pichai, Chief Executive Officer of Alphabet and Google, sounded an optimistic tone on the results.
“Our investments in deep computer science, including artificial intelligence, ambient computing and cloud computing, provide a strong base for continued growth and new opportunities across Alphabet,” he said. “I’m really pleased with our continued progress in Search and in building two of our newer growth areas — YouTube, already at $15 billion in annual ad revenue, and Cloud, which is now on a $10 billion revenue run rate."
CFO Ruth Porat continued the upbeat theme.
“In 2019 we again delivered strong revenue growth, with revenues of $162 billion, up 18% year over year and up 20% on a constant currency basis,” she said. “To provide further insight into our business and the opportunities ahead, we’re now disclosing our revenue on a more granular basis, including for Search, YouTube ads and Cloud.”
