Alphabet Q3 Results Miss Street View As YouTube Ad Revenues Drop; Stock Down 5%

Shares of Alphabet Inc. (GOOG,GOOGL), the parent company of Google, slipped over 5% in extended trading session on Tuesday after both profit and revenues for the third quarter missed Wall Street estimates, as YouTube ad revenues dropped in the quarter.

Alphabet reported third-quarter profit of $13.91 billion or $1.06 per share, down from last year’s profit of $18.94 billion or $1.40 per share. On average, 31 analysts polled by Thomson Reuters estimated earnings of $1.25 per share for the quarter. Analysts’ estimates typically exclude one-time items.

Revenues for the quarter gained 6 percent to $69.09 billion from $65.12 billion last year. Analysts had a consensus revenue estimate of $70.60 billion for the quarter.

Google advertising revenues rose to $54.48 billion from $53.13 billion last year, as Google Search revenues increased, while revenues from YouTube ads decreased. Google cloud revenues rose to $6.87 billion from $4.99 billion last year.

Commenting on the results, CEO Sundar Pichai said, “We’re sharpening our focus on a clear set of product and business priorities. Product announcements we’ve made in just the past month alone have shown that very clearly, including significant improvements to both Search and Cloud, powered by AI, and new ways to monetize YouTube Shorts. We are focused on both investing responsibly for the long term and being responsive to the economic environment.”

CFO Ruth Porat said: “Our third quarter revenues were $69.1 billion, up 6% versus last year or up 11% on a constant currency basis. Financial results for the third quarter reflect healthy fundamental growth in Search and momentum in Cloud, while affected by foreign exchange. We’re working to realign resources to fuel our highest growth priorities.”

GOOG closed Tuesday’s trading at $104.93, up $1.96 or 1.90%, on the Nasdaq. The stock, however slipped $5.80 or 5.53% in the after-hours trading.

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