Google Advertising Revenue Growth Slows

Alphabet’s first-quarter revenue missed analysts’ estimates, sparking concern that advertisers are shifting some spending to digital rivals, according to Bloomberg.

Sales came in at $29.5 billion, excluding payments to distribution partners, Alphabet said in a statement. Wall Street was looking for $30.04 billion, according to the average of analysts’ estimates. Revenue from Google advertising rose 15 percent, the slowest pace since 2015. That was a stark contrast to scandal-plagued Facebook, which last week reported a 26 percent jump in ad sales.

CFO Ruth Porat attributed the slowdown to currency fluctuations and the timing of product changes, though she didn’t explain which products and why that would hurt growth. On a conference call after the results, analysts repeatedly asked for more details, to the point where Ross Sandler from Barclays said he was beating a “dead horse“ by asking again.

Ad revenue growth was solid on mobile, but barely present on desktop and tablets, according to data gathered by digital marketing agency Merkle. That contributed to the overall slowdown, Merkle’s associate director of research Andy Taylor said. "It’s unclear how Google might be able to ramp growth back up on these device types," he said. "A lot of the low-hanging fruit has long since been plucked.

The number of clicks on Google ads rising just 39 percent, the lowest year-over-year growth since 2016. The price, or cost per click, fell 19 percent. Operating margin, a closely watched profit metric, was 23 percent, excluding the antitrust fine. Google capital expenditures dropped sharply in the quarter, in part because of a jump in real-estate spending in the year-earlier period.

Net income was $6.66 billion, or $9.50 a share, versus $9.4 billion, or $13.33 a share, a year earlier, the company said. The latest results were dented by a $1.7 billion European Commission fine for antitrust violations. Excluding that, profit was $11.90 a share.