Google Misses On Sales, YouTube Revenue Disappoints

In a surprise move Monday, Google’s parent, Alphabet Inc., provided financial information on some of its operations, for the first time disclosing revenue results in areas like YouTube and cloud computing.

However, The new data didn’t distract from disappointing results in its core online-advertising operation, The WallStreet Journal reports.

Operating income, a measure of Alphabet’s profit from central bets like search, was $9.3 billion, much lower than the consensus projection of $9.9 billion. This marks the ninth time in 10 quarters that the company missed on that metric, according to FactSet.

Revenue of $46.1 billion for the fourth quarter also fell short of analyst expectations of $46.9 billion.

The results punctuate 21-year-old Google’s stop-and-go efforts to mature from Silicon Valley adolescence into adulthood. For years, it managed to cram ever more advertising into its established search and maps platforms, among others. It is still doing that, but the company’s growth increasingly depends on newer areas like digital video powerhouse YouTube and bets in less flashy areas like cloud storage.

The earnings report was Alphabet’s first since Sundar Pichai was promoted to chief executive in December, succeeding Google co-founders Sergey Brin and Larry Page. Messrs. Brin and Page are still on Alphabet’s board—Mr. Page is chairman of the executive committee—and hold a supermajority of voting shares, giving them effective control of decision making at Google that remains unchanged.

Reuters graphic

Alphabet said YouTube exceeded $15 billion in annual revenue in 2019. That would be on the lower end of projections for the video business, which has been the subject of educated guesses for years, and suggests that YouTube pulls in less than $8 a year from each of its 2 billion users. On a call with analysts, Mr. Pichai said he believes there is “significantly more room” to make money off YouTube’s users.

Cloud, on the other hand, is on track for $10 billion in revenue this year, Alphabet said, representing better-than-expected figures for a business that operates in the long shadow of competitors Amazon.com Inc. and Microsoft Corp. By comparison, Google’s search unit pulled in $27.2 billion in the last quarter alone.

Google faces a fierce array of threats this year. Competitors including Amazon are chipping away at its online-advertising business, while state and federal regulators are beginning broad investigations of purported anti-competitive behavior. Google has said it would cooperate with the inquiries.