Alphabet Reports Q1 Revenue Drop As Google Sales Disappoint

Alphabet Inc. reported a drop in its revenue for the first three months of 2019, the company’s earnings report released on Monday revealed.

The slump saw the firm’s shares take a hit, stumbling slightly in the hours following the afternoon report.

Alphabet, a company that owns global tech giant Google, reported shortcomings in all major categories in quarter 1 2019:  Google advertising, revenue from other Google businesses, and a category dubbed “other bets,” that comprises non-Google businesses.

Q1 earnings also took another hit from a $1.7 billion fine from European regulators for the company’s online-advertising practices.

Per the report, Alphabet’s Q1 earnings after deducting traffic-acquisition costs (TAC) amounted to $6.66 billion from revenues worth $29.48 billion, at $9.50 per share. Comparatively, Alphabet reported profits of $13.33 a share in the same period a year ago, with $24.86 billion after TAC sales.

Ostensibly, the company would have reported earnings close to $11.90 a share had it not suffered the huge fine. It appears analysts expected the company to post ex-TAC revenues in the region of $30 billion at $10.60 per share, a fact that may have ignored the impact of the fine.

The results also showed that the Alphabet’s growth in revenue labored at less than 20%, while sales managed 16.7% or 18.6% if TAC is included. A year ago, the company’s sales grew by 23.4%, and in the past three years, not once have growth levels hovered below 20%.

Following a forecast from company execs, Alphabet shares tumbled further, jumping from 5% to 7%.

In a conference call on Monday, company executives sought to explain the decline with fingers pointed at currency exchange rates. Even then, the agreement was that spending would not be affected as the U.S. dollar was seen to be strengthening against other major global currencies.

A breakdown of the revenue and sales shows that in Q1, sales from advertising brought in $30.72 billion, down from an expected $31.48 billion. Revenues from Play Store, Google’s hardware arm and Google Cloud totaled $5.45 billion, against an expected $5.67 billion. The “Other Bets” section saw revenues of $170 million, two million shy of expectations.