Google’s third-quarter revenue rose 20% but fell below Wall Street expectations as growth in the technology giant’s core advertising business slowed and expenses continued to rise.
Google missed on earnings, too, driving shares down as much as 6% in after-hours trading. Profit excluding certain items was $6.35 a share. Analysts had expected $6.53.
Google reported revenue of $16.52 billion, just shy of the $16.57 billion analysts were looking for.
Revenue, excluding sales passed on to partners, was $13.2 billion, in line with analyst estimates.
Most troubling to investors: Google posted a slowdown in the total number of ads, or paid clicks, in the three months that ended Sept. 30.
Paid clicks rose 17% year-over-year. Analysts had expected 22% or more.
Revenue growth at Google’s own websites was 20%, down from 23% in the prior quarter.
The Mountain View, Calif., company reported third-quarter earnings after the market closed on Thursday.
The earnings miss came amid growing concerns from analysts on heavy spending on new hires, data centers and cutting-edge technologies such as drones, driverless cars and Internet-connected eyewear.
Ahead of the earnings release, Cantor Fitzgerald analyst Youssef Squali and other analysts expressed concern over Google’s eroding margins. Squali called margin deterioration a “long-term concern” in a recent research report note.
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SOURCE: USA Today