Google parent Alphabet missed earnings expectations and tumbled over 5% after hours.

 

The amount Google charges for clicks on ads is falling. It was down around 14% from the same quarter last year, and down 6% from last quarter. This is a key metric for the company, which gets the vast majority of its revenue from ads.

Google is still growing in a serious way, with the number of money-making clicks up around 43% from the same time last year. But each individual click is making less money now.

 

Earnings missed, operating income disappointed, and costs per click fell notably.

  • 4Q EPS $9.70, estimate $10.04 (range $9 to $10.92) (Bloomberg data)

  • 4Q paid clicks +43%

  • 4Q Google other revenue $4.69 billion

  • 4Q revenue ex-TAC $25.9 billion, estimate $25.59 billion (range $24.91 billion to $26.36 billion) (BD)

  • 4Q cost-per-click -14%

  • 4Q operating income $7.66 billion, estimate $10.24 billion (range $9.92 billion to $10.90 billion) (BD)

  • 4Q Other Bets revenue $409 million

  • 4Q Other Bets operating loss $916 million

  • 4Q Google advertising revenue $27.23 billion

  • 4Q free cash flow $5.96 billion

  • 4Q capital expenditure $4.31 billion

    • Bloomberg’s Gerrit De Vynck notes one potential silver lining:

    Costs in the “Other Bets” division — which works on new business lines — are coming down while revenue is going up.

    The division is still losing money, but it’s not nearly as bad as it was last year.

    Of course there was an attempt to save the day…

  • Alphabet to Buy Back Shares up to Added $8.59B Class C Stock

    • But for now it’s not helping the stock.

    Nasdaq futures are suffering as GOOGL losses offset AMZN after hours gains…

     

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