Published in News

Google misses on quarterly revenue estimates

by on26 October 2018

Margins erode like dust in the wind

Google parent Alphabet missed analysts’ quarterly revenue estimates for the first time in at least two years and reported continuing erosion of its operating margin.

The tech company’s third quarter results fanned investor concern that big investments in new businesses, increasing regulatory scrutiny and emerging competition are producing slow and unpredictable returns.

Overall revenue rose 21 percent to $33.74 billion, missing analysts’ estimate by about $310 million. Google ad sales contributed 86 percent of revenue, but growth slowed to 20 pecent from nearly 24 per cent last quarter.

Analysts say that there are cost pressures which are building up and these are mainly responsible for this period’s disappointment.

The company attributed much of the slower revenue growth to unfavorable currency exchange rates, lower ad pricing to contend with antitrust concerns, new privacy rules in Europe and increased competition from Amazon, financial analysts said.

Non-advertising revenue, such as from sales of mobile apps and cloud computing services, also came in slightly below expectations. Those results combined with rising expenses brought down the company’s operating margin to 25 percent from 28 percent a year ago.

Alphabet reported net profit of $9.2 billion compared with $6.7 billion in the year-ago quarter.  Earnings were boosted by a lower tax rate and favorable valuation of the firm’s investments in startups such as Uber.

Last modified on 26 October 2018
Rate this item
(0 votes)

Read more about: