(Bloomberg) — 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 from in 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 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.
YouTube spent much of 2019 responding to criticism that it doesn’t do enough to limit the spread of toxic videos and misinformation. The company was also forced to end targeted ads on clips that are made for kids, a large and growing audience.
YouTube’s Year Under Fire Shows No Signs of Letting Up
YouTube also shares a lot of ad revenue with partners, including video creators and larger media companies. That shows up in Traffic Acquisition Costs, or TAC, which grew 14% to $8.5 billion in the fourth quarter, from the same period a year ago.
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 this business to try to catch up with Amazon and Microsoft Corp. Under cloud boss Thomas Kurian, the internet giant is also making acquisitions, buying four companies in the booming sector last year.
Until now, cloud and YouTube had been bundled together in an opaque Google metric known as Other Revenue.
While it increased disclosure on YouTube and cloud, the company also stopped sharing information on how many times people click on Google ads and how much Google charged for each of those clicks. Those statistics used to be closely followed, but had become less important in recent years.
(Updates with YouTube numbers in third paragraph.)
To contact the reporters on this story: Gerrit De Vynck in New York at [email protected];Mark Bergen in San Francisco at [email protected]
To contact the editors responsible for this story: Alistair Barr at [email protected], Jillian Ward
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="For more articles like this, please visit us at bloomberg.com” data-reactid=”24″>For more articles like this, please visit us at bloomberg.com
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Subscribe now to stay ahead with the most trusted business news source.” data-reactid=”25″>Subscribe now to stay ahead with the most trusted business news source.
©2020 Bloomberg L.P.
Add Comment