Alphabet delivers mixed fourth quarter

Google-parent Alphabet (GOOGL) late Thursday reported fourth-quarter EPS that missed views as revenue growth slowed but still beat expectations, sending the internet search leader’s stock down in after-hours trading.

Alphabet pointed to a one-time tax adjustment as the reason it came up short in Q4.

Meanwhile, aggregate cost-per-click dropped 15 percent from a year ago and 9 percent from prior quarter.

Ruth Porat, CFO of Alphabet, in a statement attributed the increase largely to mobile search and to YouTube video and programmatic advertising. He mentioned a two-year-old “store visits” tracking tool that has helped advertisers record 3 million visits to stores that Google believes were driven by its digital ads. Google segment revenues rose to $25.8 billion from $21.2 billion a year ago.

Alphabet will “continue to calibrate the magnitude and pace” of its investments in other bets, and “exercise careful stewardship over the amounts and pace of investments”, Porat said.

Automated ad buying has become popular for its ability to efficiently complete the more rote or mundane aspects of media purchasing and placement.

Google’s “Other” revenue – its non-advertising business, which includes its “G Suite” business software and nascent hardware business – reached $3.4 billion, a 62 percent increase from a year ago.

Its main operating unit remains Google and advertising remained the money-making engine for the company, but the number of paid clicks shrank, according to the earnings report.

Alphabet’s focus on new sources of growth away from its traditional search business shall take some time to fructify, but the company appears to be on the right track and GOOG stock will benefit from this strategy. However, Google faced a higher tax rate of 22 percent, compared to the 19 percent for the year overall, contributing to the impression in profitability. Pichai said he was “thrilled” with the reception of the new products and that the company is committed to expanding its hardware offerings for the long term. Porat added on the call that for the full year, Other Bets generated $809 million in revenue, led by Nest, Fiber, and Verily, its life-sciences division.

Also, LinkedIn, which was recently acquired by Microsoft, accounted for $228 million in revenue and a net loss of $100 million for the quarter.