Shares of tech giant Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) slipped in after-hours trading on Monday, following the company's first-quarter earnings release. The stock was down more than 7% after hours, as of 5 p.m. EDT. A meaningful deceleration in top-line growth is probably the main reason for the market's pessimistic response to the report.
Here's a look at the results.
Slower growth and a massive fine
Alphabet's first-quarter revenue increased 17% year over year to $36.3 billion, coming in $1 billion below analysts' consensus forecast for the metric. In constant currency, revenue was up 19% year over year -- a deceleration from 23% constant-currency revenue growth in Alphabet's fourth quarter of 2018.
Alphabet's earnings per share for the period were $9.50, or $11.90 when excluding a European Commission fine. The EC ruled that "Google had with AdSense for Search partners infringed European competition law," Alphabet said. Of course, the fine wasn't a surprise going into earnings, as the EC's $1.7 billion fine against Google was already announced in March.
Helping drive Alphabet's results was a 39% year-over-year increase in paid clicks on Google properties during Q1. But a 19% decrease in the amount Alphabet received from advertisers per click, or cost per click, offset some of this gain. In total, Google properties advertising revenue increased 17% year over year to $25.7 billion.
On Alphabet's network members' properties, impressions were up 6% year over year and cost per impression rose 1%. Total Google network members' properties advertising revenue increased 8% year over year.
Alphabet's "Google other" segment continued to see solid growth, with revenue rising 25% year over year. But even though this is faster growth than Alphabet's overall revenue growth, it's notably a meaningful deceleration compared with 31% year-over-year Google other revenue growth seen in Q4.
The segment is closely watched, as it includes some of the company's fastest-growing and most important catalysts: cloud, the app store, and hardware. Alphabet's cloud-computing business, in particular, is expected to be a long-term driver of meaningful growth for the company.
Speaking to some of the elements of its Google other segment during its earnings call, management said demand for its lineup of Google Home smart speakers remains "strong" -- especially demand for its Google Home Mini. Management also noted that it is "still early in our hardware journey" and that it will continue to double down on its product lineup. Finally, Alphabet said Thomas Kurian, a former Oracle executive who was hired to run Google Cloud late last year, has "hit the ground running."