FILE- In this Feb. 14, 2018, file photo the logo for Alphabet appears on a screen at the Nasdaq MarketSite in New York. Google parent company Alphabet posted mixed fourth-quarter results on Monday, Feb 3, 2020, falling short on Wall Street's expectations for revenue but beating on profit. (AP Photo/Richard Drew, File)

Google 4Q revenue grew, but not enough for Wall Street

February 03, 2020 - 4:08 pm

SAN FRANCISCO (AP) — Google's revenue grew, but Wall Street wanted more.

Parent company Alphabet's stock fell nearly 5% after financial results came out Monday, even as profits beat expectations for the last three months of the year.

Alphabet said Monday it earned $10.7 billion, or $15.35 per share, up 19% from $8.9 billion, or $12.77 per share, a year earlier. That's more than the $12.49 a share analysts polled by FactSet were expecting.

Net revenue, after subtracting advertising costs, was $37.6 billion, up 18% from $31.8 billion a year earlier. But analysts were looking for $38.4 billion.

This was the second rocky quarter in a row for the online search leader. Its third quarter brought higher-than-expected revenue but a profit shortfall due to higher spending on new hires, data centers and other expenses.

While Google is still the clear leader in the digital advertising market, it is seeing growing competition from the likes of Facebook and Amazon.

Google — and with it, Alphabet — makes the majority of its money from selling targeted advertising across the web, apps and Google products including its search engine and video streaming site YouTube. Investors are now also closely watching the growth of Google’s cloud business and its aspirations in the health care industry. Google agreed to buy the fitness tracker company Fitbit in November.

Alphabet disclosed revenue for YouTube and its cloud business for the first time, something analysts have been seeking for years. It said YouTube's advertising revenue was $4.72 billion, up 31% from $3.61 billion a year earlier. Google Cloud revenue grew 53% to $2.61 billion from $1.71 billion a year earlier.

This was Alphabet's first earnings report with Sundar Pichai at the company's helm, following the depature of co-founders Larry Page and Sergey Brin, the co-founders of Google, in December. Pichai was head of Google before.

Shares of Alphabet fell $68.68, or 4.6%, to $1,413.92 in after-hours trading, after increasing 3.5% during the regular session.

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