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Alphabet Beat Q4 Earnings Results, but Stock Fell on Expenses

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Alphabet posts strong Q4 earnings

Alphabet (GOOGL) posted impressive fourth-quarter 2018 results on Monday. The Google parent delivered better-than-expected earnings as well as revenues. The upbeat results came amid the company’s focus on growing its business and consistently providing higher revenues backed by strong growth in advertising sales. However, the continued trend of a decline in its cost per click and a surge in costs weighed on the operating margins in the quarter. The stock fell more than 3% in after-hours trading on February 4 on investors’ concerns over eroding advertising prices and higher costs. The stock closed 2.04% higher at $1,141.42 on Monday.

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Alphabet’s earnings and revenues

Alphabet posted net income of $8.9 billion, or $12.77 per share, in Q4 2018. Excluding the $1.3 billion investment-related gains, earnings were above the Wall Street expectations of $10.86 per share. Earnings were also 31.6% higher than the company’s earnings of $9.7 per share in Q4 2017.

The tech giant also beat its revenue expectations in the quarter. Alphabet reported revenues of $39.3 billion in the fourth quarter, which exceeded analysts’ expectations of $38.93 billion for the quarter. Alphabet’s revenues were 22% higher than the prior-year quarter revenue of $32.3 billion. On a constant currency basis, revenues increased 23% year-over-year in Q4 2018. Excluding traffic acquisition costs, revenue was at $31.85 billion, up 23% YoY.

Alphabet peers Amazon (AMZN) and Facebook (FB) exceeded both earnings and revenue estimates in the fourth quarter. On the other hand, Alibaba (BABA) beat earnings expectations but missed revenue expectations in the December-ending quarter. Twitter (TWTR) plans to release its quarterly results on February 7.

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