Alphabet's stock sank after Q1 revenues missed Wall Street targets

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  • Alphabet, the parent company of the internet search giant Google, fell short of Wall Street’s revenue targets for its first three months of the year.
  • The stock was down over 7% in after-hours trading on Monday.
  • A slowdown in Google’s ad revenue could be the reason for the missed targets.
  • Google’s ad revenue grew by only 15% year over year in Q1 2019, compared to over 24% year over year growth rate in Q1 2018.
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Alphabet, the parent company of the internet search giant Google, fell short of Wall Street’s revenue targets for its first three months of the year, and the stock was down over 7% in after-hours trading on Monday.

“We delivered robust growth led by mobile search, YouTube, and Cloud with Alphabet revenues of $US36.3 billion, up 17% versus last year, or 19% on a constant currency basis,” Ruth Porat, the chief financial officer of Alphabet and Google, said in a statement on Monday.

A slowdown in Google’s ad revenue could be the reason for the missed targets. Google’s ad revenue grew by only 15% year over year in Q1 2019, compared to over 24% year over year growth rate in Q1 2018.

“The timing of product changes in ads at times can have an impact on year-on-year growth rates,” Porat said during Monday’s earnings call. “We will continue to make changes with a focus on the long-term best interest of users and advertisers.”

Here’s what Alphabet reported:

Net Revenue (excluding TAC): $US29.48 billion, up 18.6% year over year, but below the $US30.04 billion that analysts expected.

Q1 EPS (GAAP): $US9.50 (including a $US1.7 billion EU fine), compared with $US10.10 expected by analysts.

Other bets revenue: $US170 million, compared with $US150 million last year.

Other bet operating loss: ($US868) million versus ($US571) million last year.

Traffic acquisition costs (TAC): $US6.86 billion, or 22% of advertising revenue, compared with 24% of advertising revenue during last year.

Google’s capital expenditure: $US4.6 billion, compared with $US7.3 billion during the same period last year.

Employees: 103,459, adding more than 4,600 employees to its payroll in the first quarter.

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