Rising costs and falling ad rates a concern: Alphabet Inc Class A (NASDAQ: GOOGL) stock lost over 3.1% in the pre-market session of Feb 4th, 2019 (Source: Google finance). EMEA revenues were $12.4 billion, up 20% year-over-year in both reported and constant currency terms with a slight headwind primarily from Europe. APAC revenues were $6.1 billion, up 29% versus last year and up 32% in constant currency, reflecting the weakness of the Australian dollar. Moreover, declining ad rates and rising costs led to the stock fall. In the fourth quarter, GOOGL used $6.85 billion for Google’s capital expenditures, up from $3.81 billion in the year-earlier period. Overall in 2018, Google’s capital expenditures had nearly doubled to $25.46 billion. The company’s operating margin also narrowed to 21% from 24% in the year-ago period.
The company has reported a fourth-quarter net income of $8.95 billion, compared with losses of $3.02 billion in the year-ago period. The changes to the U.S. tax code resulted in a $9.9 billion expense in the fourth quarter of 2017. GOOGL’s bottom line benefited from a $1.3 billion unrealized gain from non-marketable debt security is held.
But Performance Beat Analyst estimates: GOOGL in the fourth quarter of FY 18 has reported the adjusted earnings per share of $10.91, beating the analysts’ estimates for the adjusted earnings per share of $10.86, as per FactSet consensus estimate. The company had reported the adjusted revenue growth of 23 percent to $39.28 billion in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $38.9 billion. The results were led again by mobile search, with a strong contribution from YouTube followed by desktop search. Google Sites revenues were $27 billion in the quarter, up 22% year-over-year. Network revenues were $5.6 billion, up 12% year-on-year reflecting the ongoing momentum of AdMob and Google Ad Manager. Other revenues for Google were $6.5 billion, up 31% year-over-year fueled by Cloud, Hardware and Play. Total traffic acquisition costs were $7.4 billion or 23% of total advertising revenues and up 15% year-over-year.
The company posted operating income of $8.2 billion, up 7% versus last year for an operating margin of 21%. Operating cash flow was $13 billion with free cash flow of $5.9 billion. GOOGL ended the quarter with cash and marketable securities of approximately $109 billion.
GOOGL has posted strong performance U.S. revenues were $18.7 billion, up 21% year-over-year. Other Americas revenues were $2.2 billion, up 16% year-over-year and up 26% in constant currency, reflecting weakening of the Brazilian real and the Argentine peso.