Google’s third-quarter earnings

Google's parent company Alphabet missed the estimates

Google’s parent company Alphabet reports its third-quarter earnings today, according to which expectations of earnings per share were missed, but still, it was in line with what investors expected.

The stock (GOOG, GOOGL) fell around 2% after the company reported earnings and that it missed the analyst estimates.

The company’s performance as compared to what the analysts expected is given below:

  • Earnings per share: $10.12 vs. $12.42 per share expected, per Refinitiv consensus estimates.
  • Revenue: $40.5 billion vs. $40.32 billion expected, per Refinitiv consensus estimates.
  • Traffic acquisition costs: $7.49 billion vs. $7.48 billion, according to FactSet.
  • Paid clicks on Google properties from Q3 2018 to Q3 2019: 18%
  • Cost-per-click on Google properties from Q3 2018 to Q3 2019: -2%

Google’s $33.92 billion advertising revenue this year in the third quarter is a lot more as compared to $28.95 billion in last year’s third quarter. Advertising contributes the substantial part to Alphabet’s revenues. It also witnessed a rise in expenditure on research and development, sales and marketing, even general administrative fees in the third quarter, as compared to last year same time.

To compete in the market against market leaders such as Amazon and Microsoft, Google is improving its cloud ambition. The CEO Sundar Pichai said the company attained an $8 billion yearly run rate for its cloud division in 2019. Alphabet CFO Ruth Porat says Google Cloud is now the company’s third-largest driver of revenue growth.

To sell cloud products to big businesses, Google also increased its sales force. Even though companies already have contracts with Amazon and Microsoft, there is still a gap for Google to fill it and take advantage of it.

The current hardware releases, which include Pixel 4 and Pixel 4XL smartphones, will not have any effect on this quarter’s earnings, as they were released on 15th October.

Featured image: The Pancake of Heaven!

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