Investment banking giant Goldman Sachs (NYSE:GS) just reported its first-quarter earnings, and the results are underwhelming. Not only did Goldman miss revenue expectations, but the company's numbers don't look too impressive throughout most of its business segments.

Here's a look at the headline figures, as well as some of the other important points investors need to know, and what to watch for going forward.

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The headline numbers

At first glance, Goldman Sachs' first quarter looks just so-so. The bank beat expectations on earnings, generating $5.71 per share, well ahead of the $4.89 analysts had been looking for.

On the other hand, revenue was a slight disappointment, coming in at $8.81 billion, about $90 billion short of expectations. This represents a 13% drop compared with the first quarter of 2018. CEO David Solomon acknowledged that the environment has been a bit challenging, saying that "we are pleased with our performance in the first quarter, especially in the context of a muted start to the year." Let's examine what he meant by that.

Digging a little deeper

The headline numbers rarely tell the full story of how a company really performed. With that in mind, here are some of the key points shareholders need to know.

  • Goldman's return on equity (ROE) of 11.1% is certainly above the industry's 10% benchmark but is rather low compared to the other big banks that have recently reported earnings.
  • Investment banking revenue fell by 11% year over year, mainly due to low underwriting revenue. Goldman cites the lack of IPOs during the quarter, which seem to be picking up as the year goes on. However, advisory revenue jumped by 51%, which helped to offset this.
  • Trading revenue was particularly weak and is the main reason the bank missed revenue estimates. Fixed-income trading revenue dropped by 11% from a year ago, while equities trading was even weaker, down 24%.
  • Goldman's investing and lending business saw revenue fall 14% year over year, and the investment management division saw a 12% drop. Looking at the last few statistics, it's important to note that revenue declined in all four of Goldman's business segments, a rather rare occurrence.
  • Expenses fell 11% from a year ago, but not proportionally with revenue. As a result, Goldman's 66.6% efficiency ratio is a full percentage point worse than last year.
  • Goldman spent $1.25 billion on share repurchases during the first quarter, a rather aggressive rate. This represents about 1.6% of the total outstanding shares based on the current price.
  • The bank increased its dividend by 6.3% to $0.85 per quarter, which will be effective starting with the June 27 payment.

Was the first quarter good or bad?

To sum it up, Goldman Sachs' first quarter wasn't great. A lack of IPO activity and disappointing trading revenue resulted in a revenue miss, and aside from advisory revenue, there really weren't too many bright spots in the first quarter.

Having said that, there's reason to be optimistic. For one thing, there are a wave of high-profile IPOs set to take place during the second quarter of 2019 and beyond. Furthermore, Goldman is set to expand its small but successful consumer banking business significantly with the introduction of the Apple credit card later this year. These potential catalysts could certainly translate to profits for shareholders.

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