Alphabet reported quarterly revenue that missed analysts’ estimates on waning search advertising growth, while new sales numbers on YouTube also disappointed Wall Street. The stock fell more than 4% in extended trading.
Overall revenue, excluding payments to partners, was US$37.6-billion in the fourth quarter, less than analysts’ projections of $38.4-billion, according to data compiled by Bloomberg. Advertising revenue in the quarter rose 17%, slower than the 20% year-over-year growth from in the same quarter a year earlier.
YouTube ads generated sales of $15.1-billion in 2019, up 36% from the previous year, the company said in a statement. That excludes paid subscriptions, but it’s still well below what many analysts estimated. Google has consistently said YouTube is a major source of growth but hadn’t broken out details until Monday.
Google’s search ad business, while still hugely profitable, isn’t expanding as quickly because of the proliferation of other ways to reach huge audiences online, including social media, e-commerce, and video. The company’s search unit posted a 17% gain in sales in the key holiday quarter, but that was outpaced by 25% growth in Facebook’s ad business. Amazon.com’s Other division, which is mostly advertising, saw sales surge 41%. That business is much smaller than Google’s, but it has grabbed more lucrative shopping-related searches in recent years.
In an online video, YouTube is an important asset for Google. But that division spent much of 2019 responding to criticism that it doesn’t do enough to limit the spread of toxic videos and misinformation. YouTube was also forced to end targeted ads on clips that are made for kids, a large and growing audience.