Google parent struggles with mobile clicks
new york — Alphabet Inc’s Google failed to reap the benefits of a strong economy that bolstered rivals in the first quarter as the leading internet ad company faced increased competition in its search and hardware businesses and suffered from disruptive changes at YouTube.
Shares of Alphabet dropped seven per cent after hours after closing up 1.5 per cent at a record-high of $1,296.20. Alphabet chief financial officer Ruth Porat told analysts the company was experimenting with its ad products as users grow reliant on mobile devices and that it was seeing revenue volatility as a result.
Sales of Google’s Pixel phones also struggled amid intense competition in the premium smartphone market, she said.
Major competitors for ad spending such as Facebook Inc , Snap Inc, Amazon.com Inc and Twitter Inc all reported last week quarterly revenue above or in line with analysts’ expectations.
Alphabet said its quarterly revenue rose 17 per cent from a year ago to $36.3 billion, compared with Wall Street’s average estimate of $37.3 billion, according to IBES data from Refinitiv. The 17 per cent rise was the slowest in three years and compared with 26 per cent for the same quarter a year earlier.
Facebook, the No. 2 internet ad company, posted 26 per cent growth to $15.1 billion in quarterly results last week.
Alphabet said paid clicks fell nine per cent compared with the previous quarter. Porat also said that slower revenue growth reflected foreign exchange effects and a strong 2018. Revenue rose 19 per cent in the quarter in constant currency.
Quarterly costs rose about the same as revenue, up 16.5 per cent from last year to $29.7 billion.
Expenses have surged faster than revenue for much of the past two years, concerning some investors amid increased scrutiny on the company’s privacy practices and efforts to restrict advertising on potentially offensive content.
But positive macroeconomic signals have given them reason to believe that the company’s ads business is healthy. Shares had risen 11.9 per cent between its last earnings announcement and Monday.
About 84.5 per cent of revenue, compared with 85.5 per cent a year ago, came from Google’s ad business, which sells links, banners and commercials across its own websites and apps and those of partners.