Alphabet failed to meet the expectation of the market analyst on its recent first quarter earnings report despite upbeat revenue.

The parent company of Google accumulated $20.26 billion of revenue and $7.50 earnings per share lower than the estimated $20.37 billion revenue and $7.97 EPS of the analysts, respectively.

Additionally, the net earnings of multinational conglomerate company had a net earnings of $5.25 billion, an increase of 17.6 percent on annual basis though still a bit lower than the expected $5.54 billion.

One of the drivers of revenue of the firm was the mobile advertising and the growing relevance of programmatic advertising. Macquarie Research analyst Ben Schachter commented that google is showing more ads in a smaller and people are clicking more often.

Based on the report of Alphabet Chief Financial Officer Ruth Porat, the traffic acquisition costs or TAC covered 21 percent of the advertising revenues of the company, which stood for $3.8 billion in total during the first quarter. On the previous quarter, the TAC was 22 percent of advertising revenue.


Sameet Sinha, B. Riley & C., a senior research analyst, explained that if you are getting mobile researches from Apple devices you have to pay Apple for traffic so that revenue can happen thus the same thing on the programmatic side. He said that when you end up representing more people and selling ad space  or buying their ad space, you have to pay somebody else.

The Google segment of the company accumulated $6.27 billion in operating income and 16 percent year over year in google ad revenues which totaled 18.02 in the said period. At the moment, Google has a total of 64,115 employees already since the addition of 2,300 for the first quarter.

Furthermore, Porat assured the investors that the  Alphabet got everything on the right track as it pushes for more exciting new technologies.

“Our Q1 results represent a tremendous start to the year with 17% revenue growth year on year and 23% growth on a constant currency basis” she said.


Alphabet also confirmed that they have been investing in machine learning and Artificial Intelligence for years and they are at an exceptionally interesting tipping point to where these technologies are really taking off.

In terms of capital expenditures, the multi-tech company allotted $2.4 billion in the quarter lower than the $2.6 billion projected by the market analyst before the released of the earnings report. The company spent a significant amount on its Fiber Internet business.

Shares of Alphabet traded higher at $759, up by 6.47 or 0.86 percent after opening strongly at $755.38. The stock had a session high of $760.45 and a session low of $749.55 with a market capitalization of 528.24 billion and a price earnings ratio of 33.27.

The parent company of Google has a 52-week high of $810.35 and a 52-week low of $532.23. It has an average daily trading volume of 3,875,200 and had a trading volume of 1,713,00 the other day.