Google Q3 results: Strong earnings beat expectations but revenues fall short

This afternoon, Google-parent Alphabet reported Q3 results. The company significantly beat financial analyst expectations on earnings but missed on revenue. The stock initially was down in after-hours trading but has recovered somewhat.

Bottom line beat, topline miss. Revenues were expected to be $34.04 billion but came in at $33.7 billion, representing 21 percent annual growth. Analysts were expecting earnings per share of $10.42. However, Google delivered $13.06 billion.

Google’s “other revenues,” which includes its cloud business, Pixel and Google Home hardware, reached $4.6 billion. That was up $1 billion from a year ago.

Google advertising revenues were just under $29 billion, the bulk of the parent company’s quarterly revenue. Traffic acquisition costs were flat, year over year, at 23 percent. Paid clicks grew 62 percent year over year and 10 percent from Q2. Cost per click rates declined by 28 percent annually and 7 percent vs last quarter.

The company has $106 billion in cash and short term investments. At the end of the third quarter Google had 94,372 employees compared with 78,101 a year ago.

The emerging Amazon threat. Amazon has emerged over the past year as the third largest online ad platform after Google and Facebook. Emarketer has forecasted that the e-commerce company will cross $2 billion in ad revenue this year. A survey by Third Door Media, the parent company of MarTech Today, found 80 percent of current Amazon advertisers plan to increase spending in 2019. Some of this growth is coming at Google and Facebook’s expense.

Investors have expressed concerned about the competitive impact of Amazon on Google ad revenue growth.