Google parent Alphabet falls short of revenue estimates in earnings report

Alphabet Inc. reported quarterly revenue that missed analysts’ estimates, and new sales numbers on YouTube also disappointed Wall Street, sending the shares down more than 4% in extended trading.

Overall revenue, excluding payments to partners, was $37.6 billion in the fourth quarter, less than analysts’ projections of $38.4 billion, according to data compiled by Bloomberg. Advertising revenue in the quarter rose 17%, slower than the 20% year-over-year growth for the same quarter a year earlier.

YouTube ads generated sales of $15.1 billion in 2019, up 36% from the previous year, the company said in a statement. That excludes paid subscriptions, but it’s still well below the $22 billion that Morgan Stanley analysts estimated. Google has consistently said YouTube is a major source of growth, but it hadn’t broken out details until Monday.

The results suggest Google is struggling to maintain growth in the face of tougher competition. Amazon.com Inc. has become a digital ad rival, grabbing more valuable shopping-related searches. Revenue from the e-commerce giant’s “Other” division, which is mostly advertising, surged 41% in the key holiday quarter, from a year earlier, while Google’s Search & Other unit saw sales rise 17% in the same period.

Alphabet also reported cloud results for the first time. Sales, including a service that rents computing power and G Suite internet-based productivity software, totaled $2.6 billion, up 53% from a year earlier. Google is pouring money into that business to try to catch up with Amazon and Microsoft Corp. Under cloud boss Thomas Kurian, the internet giant is alsoUntil now, cloud and YouTube had been bundled together in an opaque Google metric called Other Revenue.

No surprise here, from my observations they keep passing search revenue streams to Amazon likely without even realizing the consequences for their ad ecosystem.

What they don’t have enough dirt on their customers to sell?

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