Google missed a kick in the recent surge in revenue growth, which carried their shares of the parent of the alphabet to record highs, sending shivers through Wall Street, as investors worried that it could signal a turning point in their main advertising business.
alphabet shares fell more than 7 percent in trading after market on Monday after the company reported revenue growth of 17 percent during the first three months of the year – a staggering figure for a company whose quarterly revenue has now reached $ 36.3bn, but still about $ 1 billion less than most analysts expected.
Alphabet blamed the deficit on a number of factors, including the strength of the US dollar, stiff in comparison with a strong year-ago quarter, and consideration of synchronization, which left him with fewer improvements in its advertising services, in recent months, which may have pushed revenue higher .
However, the lack of detail left many on Wall Street are struggling to understand, with the & # 39 is a business-to & # 39; of Google ads may start to suffer from the more serious & # 39; oznyh problems, such as weakening demand from advertisers and increased competition from Amazon, which has made a concerted push into the search market,
"It is very difficult to know for sure, there are so many moving parts," said Youssef Squali, an analyst at SunTrust Robinson Humphrey. Google executives have been vague on a call with analysts the company, how it changes the terms of its advertising services were taken into account in the slowdown, he said.
"They were very, very opaque that these changes, as well as the impact of the changes," he said, but added the increase in income of the alphabet: "It shows the potential signs of stress"
A year ago, 25 percent jump in revenue coincided with an acceleration of growth in the large consumer Internet companies to prepare the ground for a strong share price rally in the sector.
US dollar exchange rate growth to & # 39 is an important factor slowing down since then, Ruth Porat said CFO – currency fluctuations added 3 percentage points to growth in the first three months of 2018, but erased the 2 points of growth this year.
She also warned that "the life of the product changes may affect the year-on-year growth rate", – the standard care of the Google executives, but more pointed one round this time.
Changes in advertising on YouTube contributed a large jump in the number of times Internet users to click on Google ads in the first three months of last year, jumping by 59 percent. In contrast, without any new changes, with an equally powerful effect, the rate of clicks growth fell to 39 percent in the last quarter.
Sundar men, CEO, said that the company was unable terms of new services around quarterly earnings calendar. "We have a long-term view of where we want to go. You will have a qoq change once in a while, "he said.
While its revenues performance disappointed investors, the alphabet has become a stronger profit than analysts expected in the first quarter – the opposite of what investors expect from a company that invests significant growth in recent quarters.
Alphabet income for the period decreased by 29 percent, to $ 9.50, as it took a $ 1.7 billion charged to cover the cost of the EU fine in March, over what regulators claimed were anti-competitive restriction is put on advertisers . *
Without this it would have reported earnings per share of $ 11.90, or more than $ 10.58 that analysts expected. benefits figures by reducing the cost of acquisition of traffic at Google, or the money the company pays to partners who are its on & # 39; waking, as well as lower-than-expected marketing costs.
the overall cost of the alphabet capital also fell to $ 4.5 billion by 40 percent, after hitting $ 25.1bn for the whole of last year.
Nevertheless, Ms. Porat shows that Google is not going to him heavy investment this year. Capital expenditures are expected to increase from n & # 39; yanlivym 2018 level, although at a much slower pace. The company has allocated $ 13 billion alone in the US this year to invest in new data centers and office extension.
* This article has been amended from the original to correct the figure to strike after the payment of income taxes