Alphabet shares sank in after-hours trading Monday after the Google parent missed Wall Street’s first-quarter revenue expectations as rivals took a share of the search engine's once-dominant online advertising.
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The tech giant said first-quarter revenue grew 17 percent to $36.34 billion, falling short of the $37.33 billion expected by analysts polled by Refinitiv and well below a revenue growth rate of 26 percent in the same period one year ago. Alphabet posted a slight earnings beat, with earnings per share of $11.90 against an expected $10.61. The EPS figure excluded a $1.7 billion fine Google paid to settle an inquiry from European regulators.
Google's revenue growth has slowed in recent quarters amid tough competition in the digital advertising space from the likes of Facebook and Amazon. Google's digital advertising revenue rose 15 percent to $30.72 billion, below Wall Street's expectations. Ad revenue grew at its slowest rate since 2015.
"We delivered robust growth led by mobile search, YouTube, and Cloud with Alphabet revenues of $36.3 billion, up 17% versus last year, or 19% on a constant currency basis," said Ruth Porat, Chief Financial Officer of Alphabet and Google. "We remain focused on, and excited by, the significant growth opportunities across our businesses."
Alphabet's traffic acquisitions costs (TAC) -- a measure of the Google parent's payments to other companies to feature its search engine -- were $6.86 billion. Excluding TAC, Alphabet posted revenue of $29.48 billion, which fell short of expectations.
Shares fell as much as 7 percent after hitting an all-time high in intraday trading. Alphabet’s stock had risen more than 20 percent on the year.
The company's rare weak result came as other tech leaders post strong earnings. Facebook, Twitter and Amazon have all reported solid quarterly results in recent days, with the latter posting its fourth straight quarter of record profit.
The Google parent said it now has more than 103,000 employees up from about 85,000 in the same period one year ago.