Alphabet, the parent company of Google, today announced Q4 2019 earnings with $46.075 billion in revenue. These numbers account for the period October to December 2019 and include the holiday shopping season for Made by Google’s hardware efforts.
Revenue is up 17% from $39.27 billion in Q4 2018, with operating income at $9.27 billion and net income of $10.67 billion for the quarter under consideration. For comparison, Alphabet reported $40.49 billion in revenue and $7.06 billion in net income, respectively, last quarter. The stock was down around 3% in after-hours trading by missing revenue estimates.
“Our investments in deep computer science, including artificial intelligence, ambient computing, and cloud computing, provide a strong base for continued growth and new opportunities across Alphabet,” said Sundar Pichai, Chief Executive Officer of Alphabet and Google, who took the helm last year after Google Co-Founders Larry Page and Sergey Brin announced they were leaving their respective roles.
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“I’m really pleased with our continued progress in Search and in building two of our newer growth areas — YouTube, already at $15 billion in annual ad revenue, and Cloud, which is now on a $10 billion revenue run rate,” Pichai said, revealing for the time ever a breakdown of Google revenues.
“In 2019 we again delivered strong revenue growth, with revenues of $162 billion, up 18% year over year and up 20% on a constant currency basis,” said Ruth Porat, Chief Financial Officer of Alphabet and Google.
It was for the first time ever that Google broke out YouTube ad revenue at $15.15 billion for 2019 — up from $11.16 billion in 2018. Meanwhile, Pichai noted a $10-billion revenue run rate for Google Cloud.
Alphabet includes performance going back to 2017 as part of “now disclosing our revenue on a more granular basis” to “provide further insight into our business and the opportunities ahead”, Pichai said.
“Google other revenues”, which includes hardware, Play Store, and non-advertising YouTube revenues, reported $5.26 billion, compared to $4.77 billion the same quarter last year (now excluding Cloud). This quarter saw the launch of the Pixel 4, Nest Mini, Pixelbook Go, Nest Wifi, and Stadia.
However, the closely-watched “Other Bets” continues to lose money, although it is increasing revenue, albeit slowly. It reported $172 million revenue primarily generated by Verily and Fiber from $155 last quarter. However, it lost $2,026 billion compared to $1.328 in Q4 2018.
Alphabet also revealed Google Cloud figures for the first time ever, with Cloud bringing in $8.92 billion in revenue in 2019, $2.6 billion of it from the fourth quarter. This is a 53% increase from 2018’s $5.84 billion and represents a more than doubling from 2017’s $4.06 billion.
Earlier, Pichai had disclosed during the company’s Q2 2019 results that the cloud division had attained an $8-billion run rate. Meantime, in the full year 2019, sales and marketing costs increased by 13% to $18.46 billion. Besides, the company also paid $1.7 billion in European Commission fines, dramatically down from the $5.1 billion it paid the previous year.
REGION-WISE GROWTH
The Asia-Pacific region showed the strongest growth, with 2019 revenue up 24% to $7.48 billion year-on-year. This despite the fact that growth has slowed down — from 26% in Q3 2019, 29% in Q2 2019, by itself a slow burn from the 36% growth rate in Q2 2018.
All regions were, however, affected by slower growth rates: US revenue rose 16% to $21.74 billion, down from its 21% growth rate the previous quarter; Other Americas grew 21% to $2.67 billion, down from 25%; and EMEA revenue went up 15% to $14.1 billion, down from 16%.
In the quarter, Alphabet also brought in $46.08 billion in total revenue, while its operating income was $9.27 billion.
Alphabet held an earnings call with investors and members of the press to further break down numbers from the Q4 2019 earnings release.