Google Profits Decline by 23 Percent

Posted on October 28, 2019 by Paul Thurrott in Google with 21 Comments

Google’s parent company, Alphabet, posted net income of $7 billion on revenues of $40.5 billion for the quarter ending September 30. Revenues gained by 20 percent, but that net income figure represents a 23 percent decline year-over-year (YOY).

“I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud,” Google CEO Sundar Pichai said in a prepared statement. “We’re focused on providing the most helpful services to our users and partners, and we see many opportunities ahead.”

As always, Google represented the lion’s share of Alphabet’s profits and revenues, with the firm’s “other bets” coasting to yet another loss, this time of $941 billion. That shortfall is almost certainly why Alphabet’s overall profits were down. (Update: Google later said it was increased R&D spending. –Paul) And as always, advertising revenue contributed most of Google’s revenues; advertising represented about 85 percent of Google’s total revenues.

Google also posted $6.4 billion in “other revenues” related to its Pixel phones, Play Store, and enterprise cloud products. That’s a big gain over the $4.6 billion it contributed a year earlier.

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Comments (21)

21 responses to “Google Profits Decline by 23 Percent”

  1. Avatar

    Danny Riley

    Other bets loss was $941 million, not $941 billion. :)

  2. Avatar

    MikeGalos

    So, combining the 20% increased revenue and 23% decreased net income works out to net income dropping from roughly 27% of revenue down to 17% of revenue. That's a 36% drop and either a pretty massive change in their business model or some serious unplanned losses.


    Anyone know about how Alphabet positioned this in their advice statements and their quarterly earnings call?

  3. Avatar

    eric_rasmussen

    I can't imagine the investments they're making in quantum are cheap. It's a big bet with a potentially huge pay out. I'm glad they're taking it on, I think Google has a chance to change the computing landscape forever. I also like Facebook's research divisions; some of the programming super heroes from my childhood work there now. Their investments into Oculus are terrific - I love my Oculus Quest more than most other entertainment devices in my home.


    Microsoft's Research used to be pretty incredible, coming up with tech a decade ahead of its time. I don't know if that is still a thing at Microsoft or not, but we never seem to hear much from then. With all the Windows 10 problems we've faced over the past few years, I really wish Midori had been given a chance!

  4. Avatar

    lvthunder

    Wow a 23% decline. That's huge. Is it just Google down that much or is it most of the tech sector.

  5. Avatar

    RonV42

    Google is very exposed because of the majority of their revenue comes from Advertising. And with all the privacy initiatives, ad blockers, tracking stripping, right to be forgotten and other regulations from various governments they will continue to be at risk.

  6. Avatar

    Greg Green

    Is advertising income down? I read somewhere some major businesses aren’t seeing a return on their advertising run by google.

  7. Avatar

    codymesh

    this kind of weirdness is par for the course for Google, but at least we now know that it's something at X that is costing them, not Google itself

  8. Avatar

    johnh3

    I wonder how the Pixel sales are going? Still a very limited distribution compared to Microsoft Surface line. I expected to get Pixel 4 to Sweden and some other countries. But we are still left out.

  9. Avatar

    Thom77

    So what exactly are Alphebet's "other bets" that is "almost certainly" the cause of the decline? By the way Thurott, I will "almost certainly" pay you back that money I owe you.

  10. Avatar

    Lordbaal

    They still made ‭$6,999,950,000‬ more then I did.

  11. Avatar

    Stooks

    Google is the most fragile of the big tech companies. With 85% coming from one product they could nose dive very easily.


    With 99% of the public detesting ads and the rise of the ad blockers, plus more and more awareness of privacy, Google is not the shinny star it used to be.


    I only use YouTube, signed in with a NON Google account. In a really rare moment I might use Google maps and only from a computer.

  12. Avatar

    Jeffsters

    Apple...oh, wait, I mean Google is doomed! Doomed I tell you!

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