Alphabet Slips As Revenue Growth Slowest In 4 Years

• EPS +20% $15.35 vs $12.60 exp.
• Revenue +16% $46.07 billion vs $46.94 billion exp.
• Traffic Acquisition Cost (TAC) $8.5 billion vs 8.5 billion exp.

Slowing Revenue Growth
Revenue growth at Google parent Alphabet slowed by more had expected in Q4. Whilst a moderate slowdown had been on the cards following Q3’s 20.5% revenue growth, Q4’s 16.1% advance in the holiday shopping period was not only disappointing but also the slowest level of growth in 4 years.

source cnbc

The slowdown was almost entirely caused by weak non-advertising revenue, a side of the business which accounts for around 20% of the group total. Growth from these divisions which include cloud computing, hardware and the Play app was just 22%, well down from 39% in Q3. 

Losses from its moonshot projects, such as the driverless car, drone delivery and drug discovery units increased by 50% to a staggering $2 billion, raising a few eyebrows.

YouTube transparency backfires
As part of the increased transparency, YouTube ad revenue was $15 billion, up 36% whilst accounting for 14% of total advertising from Google’s properties. These figures highlight the importance of the video network. However, this was expected to have been closer to 20% meaning YouTube is smaller than generally assumed.

Google cloud computing
Cloud computing division reported results separately for the first time, revealing that revenue grew 53% to $2.6 billion in the last quarter. Most of the revenue coming from its G-Suite of online applications. However, compared to Microsoft Azure’s 62% growth in most recent quarter, Google’s cloud division’s growth rate looks mediocre.