Disappointing revenue growth hits Google parent Alphabet shares in Q4

Topics Alphabet | Google | Google India

Google parent Alphabet on Monday saw disappointing revenue growth in the fourth quarter, sending shares lower even as profits topped most forecasts.

Detailing its cloud computing and YouTube revenues for the first time -- both of which showed sharp gains -- it said profits rose 19 percent from a year ago in the quarter to nearly $10.7 billion as revenues increased 17 percent to $46 billion.

Alphabet shares slipped 4.7 percent in after-market trades that followed release of the earnings figures.

The California tech giant, which dominates online search and has developed the Android mobile operating system, has been working to reduce its dependence on the digital advertising which delivers most of its cash.

"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," said chief executive Sundar Pichai.

Ruth Porat, chief financial officer, told reporters after the earnings release that the company has "consistently expanded disclosure" and "the expansion today we think is the most relevant data".

The company said its cloud computing services took in $2.6 billion in revenue in the past quarter, up more than 50 percent, and nearly $9 billion for the year.

Still, Google advertising took in the majority of revenue at $38 billion in the quarter, and more than 80 percent of its annual revenues of $162 billion.

Colin Sebastian, an analyst at Baird, said the earnings report showed "a deceleration" in growth for Google, which may have been due to the impact of fewer holiday shopping days.

Despite that, Sebastian said he sees "no change to our positive long-term thesis" for Alphabet.

Analyst Nicole Perrin at eMarketer said the results highlight the significance of YouTube, the popular video service for which Alphabet had not up to now disclosed financial data.

"This is something investors have been looking for, but the information should also give advertisers valuable information about the importance of YouTube as a digital ad vehicle," Perrin said.

"YouTube is growing strongly according to this report, and revenues are above where eMarketer had thought they were." Alphabet's "other bets" which include Waymo autonomous vehicles, life sciences and drone delivery, took in $172 million in revenue in the final three months of the year, producing an operating loss of more than $2 billion.

The results come with the company facing intense pressure around the globe over its dominance of the online ecosystem.

It also has been at the center of a dispute over tax policy for multinational firms. Global negotiators are seeking a new treaty on how to tax digital operations spanning the globe.

Pichai, who had been CEO of Google, was promoted last year to the same role at Alphabet, raising speculation on whether the tech giant might seek to reorganize its operations.


(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel