Google’s parent company Alphabet announced its financial results for the third quarter of 2019, surpassing revenue expectations. As one might expect, Google products were among the top performers, but everything wasn’t as breezy. Even though revenue is up, the profit margins have come down sharply, leaving investors with less money in hand than what was anticipated.
Alphabet clocked a total revenue of $40.5 billion in the quarter ending on September 30 — which is a 20% jump from the same period last year. This is a marginal improvement over the $40.32 billion revenue analysts expected it to make. The Google division's share of $40.3 billion accounted for a major chunk of this total number.
Search and Google's various ad services were major contributors to this growth, according to Alphabet/Google CFO Ruth Porat. Other revenues for Google noted strong growth in services like Cloud and Play Store. G Suite and budget hardware products like the Pixel 3a continue to help in upping the company’s overall income.
Despite touching new heights with revenue, Alphabet left its investors disappointed with less-than-expected earnings per share (EPS) at $10.12 per share, against higher predictions. This fall is directly linked to Google’s increased expenses across its properties that brought down the parent’s net income to $7 billion from $9.2 billion in the corresponding quarter of 2018.
Sourcing original content — particularly ad-supported media — for YouTube has been a cash drain, while costs associated with YouTube Premium and YouTube TV have exceeded revenue. The $554 million paid for a legal settlement in France and capital expenses on Pixel 3a also added to this downward momentum.
Google’s CEO, Sundar Pichai, seemed content with these results in his short speech during the earnings call. He revisited the recently concluded Made by Google event that introduced, among others, the new Pixel 4 phones and the Nest Mini speaker, while commenting on Google’s increased focus on privacy tools and the wider availability of YouTube Music and Premium.