Alphabet Q1 misses, Google shows hiccups

Google parent company Alphabet published first quarter financial results after the bell on Thursday, and the numbers missed the mark.

The tech giant reported a net income of $5.248 billion, or $6.02 per share (statement).

Non-GAAP earnings were $7.50 per share on a revenue of $20.257 billion, up 17 percent year-over-year, when including traffic acquisition costs (TAC).

Wall Street was looking for earnings of $7.97 per share with $20.38 billion in revenue.

Net revenue excluding TAC was expected to be $16.55 billion.

Alphabet delivered $16.469 billion in revenue excluding TAC, just missing the target.

Ruth Porat, chief financial officer for both Alphabet and Google, focused on year-over-year revenue growth in light of the overall miss.

"We're thoughtfully pursuing big bets and building exciting new technologies, in Google and our Other Bets, that position us well for long term growth," she said in prepared remarks.

Google revenues, which include more of the enterprise cloud, software and data management products, attributed most of Q1 sales with $20.091 billion in revenue, down from $21.178 billion the previous quarter.

Google's cost-per-click, which is how much it makes off each advertising click, decreased 9 percent year-over-year.

In the Other Bets category, which includes Alphabet's healthcare-driven initiatives and other speculative projects or 'moonshots,' the tech giant posted revenue of just $166 million over the quarter, with operating losses reaching $802 million. Nest and Fiber were primary revenue drivers in this category.

While the losses in this segment are substantial, the numbers have improved since last quarter, when Alphabet posted $3.5 billion in operating losses.

Elsewhere on the balance sheet, Alphabet's workforce headcount reached 64,115, up from 61,814 at the end of Q4. The vast majority of new hires were engineers and product managers in areas where Alphabet has prioritized investment, such as cloud and apps.

On the earnings webcast, Porat said mobile search by consumers was the primary revenue driver for the quarter. There was also solid growth by desktop and tablet search and an increase in sales of YouTube video advertising.

Google CEO Sundar Pichai focused on the company's innovations on Google search.

"We continue to invest in making search more useful on our system," Pichai said, highlighting how artificial intelligence and machine learning continue to bring new capabilities.

"At Google, machine learning is already helping us improve products every day," he said.

Looking toward the second quarter, Wall Street is expecting non-GAAP earnings of $8.20 per share with $20.82 billion in revenue.