Google parent company Alphabet Inc. (NASDAQ:GOOG)(NASDAQ:GOOGL) released fourth-quarter earnings Thursday after the market closed. Overall, they were somewhat disappointing.
First, the good news. Revenue for the quarter surpassed $26 billion, a 22% improvement versus the same quarter last year and a 16% spike over the third quarter. This beat analyst expectations by almost $1 billion.
Areas of strength continued to be mobile search results, as well as YouTube. CFO Ruth Porat was also excited about the company’s Other Bets division, which includes things like Nest and Google Fiber. Revenue in the division rose 82% versus last year, although it had an operating loss of $3.6 billion.
Cash and cash equivalents on the company’s balance sheet climbed once again, hitting $86.3 billion. Free cash flow was $6.3 billion for the quarter, despite heavy spending on research and development. It spent $3.5 billion on R&D and poured another $3 billion into capital expenditures.
Investors focused on Google’s costs per click, which is the amount it gets from advertisers. That number fell 16% versus the same period last year, versus analysts expectations of an 11% drop.
This hit the bottom line. Although revenue numbers were strong, net earnings disappointed. Analysts expected the company to deliver $9.62 per share in quarterly profits. Actual results were $9.36 per share.
Shares were initially weak in Thursday’s after-hours trading, falling 3%. They recovered somewhat when markets opened on Friday, and are down just 0.8% in afternoon trading.
