Alphabet Inc’s Q1 2019 Earnings Disappoint As Google’s Ad Revenues Fall

google sexual harassment women's walk rich de vaul
Rich DeVaul | Image: Alphabet

This is not investment advice. The author has no position in any of the stocks mentioned. has a disclosure and ethics policy.

Under the shadow of the EC's latest fine, Google's parent company Alphabet Inc (NASDAQ:GOOG) reported its earnings results for the first quarter of 2019.  Prior to the company's investor call, Wall Street had set expectations for $30 Billion in Revenue and Alphabet Inc. has reported Revenues of $29.48 Billion.

The group has however exceeded estimations for Earnings Per Share, by reporting $11.90/share as opposed to estimates of $10.17/share. As Alphabet had announced prior to today's earnings release, the company has also accounted for a $1.9 Billion fine levied on it by the European Commission for uncompetitive practices part of agreements that Google had with its AdSense partners.

Related StoryFurqan Shahid
Galaxy Z Fold 4 Goes Official with Better Design, Snapdragon 8 Plus Gen 1, S Pen Support, and More

Alphabet Inc's Net Income Falls Year-Over-Year To $6.7 Billion (EC Fine Included) As Google's Parent Company Posts $35 Billion In Revenue For 2019's First Quarter

Starting from Google, the big thing to note this quarter for the company is a big decrease in paid clicks on Google properties. This figure has decreased by 9% from Q4 2018 to Q1 2019, as opposed to an 8% increase from Q4 2017 to Q1 2018. In lieu of this decrease, Google's Cost-per-Click on Google properties has gone up by 5% over the quarter.

Alphabet Inc (NASDAQ:GOOG )reports $35 Billion in revenue, showing a 17% Year-on-Year increase. However, the company's Net Income does not show a similar increase, with or without the impact of the European Commission's fine. With the fine, the holding company's Net Income is $6.6 Billion; without it, Alphabet's Net Income is $8.3 Billion. In comparison, the group's Net Income for Q1 2018 stood at $9.4 Billion.

Moving towards Google's advertising revenues, the company posted $30 Billion in the category. This is a Year-on-Year increase from Google's Q1 2018 ($26.6 Billion of advertising Revenues), but a Quarterly decrease from $32 Billion posted last quarter. However, this decrease is normal, as it takes place every year as purchases slow down after the holiday season is over.

Losses from Alphabet Inc(NASDAQ:GOOG)'s 'Other Bets' are now a consistent pattern across the company's earnings releases. This quarter, Other Bets has posted a loss of $868 million, up from a $571 million loss in Q1 2018, and down from a $1,328 million loss last quarter. Moving towards what is perhaps the most important metric of Alphabet Inc's earnings release, Google's TAC (Traffic Acquisition Costs).

Google's TAC increased to $3.48 Billion from $3.34 Billion in Q1 2018. This is a modest increase when we compare TAC for Q1 2018, which had increased to $3.34 Billion from $2.8 Billion in Q1 2017. Additionally, Google's TAC stood at $3.9 Billion in Q4 2018, so investors will be glad to hear that the company has spent less on acquiring traffic.

Related StoryFurqan Shahid
Google Really Wants Apple to Start Using RCS — Launches of a Website to Prove a Point

However, if this decrease is analyzed in tandem with a decrease in Google's advertisement revenues, then perhaps the reasons behind this decrease are not particularly rosy. Alphabet Inc(NASDAQ:GOOG)'s Earnings-Per-Share fell to $9.50 this quarter, from $13.33 in Q1 2018, despite the fact that the company's shares outstanding decreased to 700,879,000 this quarter. Alphabet Inc's effective Tax rate has increased to 18%.

"We delivered robust growth led by mobile search, YouTube, and Cloud with Alphabet revenues of $36.3 billion, up 17% versus last year, or 19% on a constant currency basis. We remain focused on, and excited by, the significant growth opportunities across our businesses," said Ruth Porat, Chief Financial Officer of Alphabet and Google.

Thoughts? Let us know what you think in the comments section below and stay tuned. We'll keep you updated on the latest.

WccfTech Tv
Filter videos by