Google-parent Alphabet Inc. on Monday reported its worst fourth-quarter revenue growth since 2015, missing analysts’ estimate for a period in which its top online advertising rivals beat expectations.
Shares of the company fell about three per cent in extended trading to US$1,435.10.
Alphabet offered new disclosures about its cloud computing and YouTube ads units, posting US$2.61 billion and US$4.72 billion in quarterly revenue from them, respectively.
The company has been the web’s biggest draw for advertisers for a decade, enabling it last month to become the fourth listed company to top US$1 trillion in market capitalization.
But new concerns have emerged among investors about whether its dominance will last as U.S. antitrust regulators investigate Google and as Amazon.com Inc. and Facebook Inc. continue to grow their ads businesses globally.
Google over the past year has posted slowing sales growth for its ad business. It has blamed foreign exchange rates and one-time product changes.
Expenses have ballooned with hiring of thousands of salespeople, building of new data centres and marketing the Google brand through hardware and other ventures.
The fourth-quarter results continued those trends.
Overall sales were US$46.08 billion, up 17 per cent, compared with an average estimate of US$46.94 billion among financial analysts tracked by Refinitiv.
Alphabet’s total costs and expenses rose 18.5 per cent from a year ago to US$36.809 billion.
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That left profit of US$10.67 billion, or $15.35 per share, compared with the analysts’ average estimate of US$8.787 billion, or $12.53 per share.
Google faces internal challenges, too. Some of its 119,000 employees have resisted working on weapons-related software for militaries or censored search products for Chinese users, leading Google to abandon such efforts. Others have expressed frustration with curbs on companywide discussions and what they have described as retaliation for labour organizing.
In December, Google Chief Executive Sundar Pichai gained the additional role of Alphabet CEO from Larry Page as he and fellow co-founder Sergey Brin stepped back even further from day-to-day management.
It is unclear whether Pichai plans major changes to quell workplace unrest. But a shareholder lawsuit, which alleges that company leaders covered up sexual misconduct at Google, recently entered mediation and threatens to loosen the control held by Pichai, Page and Brin.
On Monday, Pichai’s new role brought with it changes to Alphabet’s financial disclosures, which investors before generally criticized as too opaque to understand how it is weathering specific challenges.
Shares of Alphabet are up 28.1 per cent in the past 12 months entering Monday, compared with 21.8 per cent for Facebook shares, 23.5 per cent for Amazon, 68.1 per cent for Microsoft Corp. and 88.7 per cent for Apple Inc.
© Thomson Reuters 2020