Alphabet Inc Shares Fall As Q4 Profit Misses, But Revenue Beats Estimates

From Alphabet Inc (NASDAQ:GOOGL) late Thursday posted mixed fourth quarter earnings results as non-advertising revenues showed impressive growth.

The Mountain View, CA-based technology giant reported Q4 EPS of $9.36, which was $0.26 worse than Wall Street consensus of $9.62. Revenues jumped 22% from last year to $26.06 billion, topping analysts’ $25.14 billion view, however.

Google’s famous “Other Bets” unit, which experiments with various technologies and business ideas, saw revenue rise to $262 million from $150 million. The unit’s net loss also contracted to $1.08 billion, from a loss of $1.213 billion last year.

On a sour note, Alphabet’s Cost of Revenue rose to 41% from 38% in the year-ago period. However, Operating Expense as percent of revenue fell to 34% from 36%. Its Free Cash Flow was $6.335 billion, and Effective Tax Rate was 22%.

Aggregate Paid Clicks rose to 36% in Q4, well above Wall Street’s +25% view. Paid clicks on Google and member sides also saw solid growth. However, Aggregate cost per click plunged 15%, matching estimates, while CPC on Google sites plunged 16%, and CPC on member sites fell 19%, both continuing a serious negative trend.

The company commented via press release:

“Our growth in the fourth quarter was exceptional — with revenues up 22% year on year and 24% on a constant currency basis. This performance was led by mobile search and YouTube. We’re seeing great momentum in Google’s newer investment areas and ongoing strong progress in Other Bets,” said Ruth Porat, CFO of Alphabet.

Alphabet Inc shares were trading at $856.98 per share on Thursday afternoon, down $1.47 (-0.17%). Year-to-date, GOOGL has gained 8.14%, versus a 2.59% rise in the benchmark S&P 500 index during the same period.

GOOGL currently has a POWR Rating of A (Strong Buy), and is ranked #1 of 44 stocks in the Internet category.

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