Alphabet reports Q3 earnings with revenue growth but cash flow miss
Alphabet posted revenue of $127.58 billion for the third quarter, beating estimates, while free cash flow fell to $9.07 billion, below analysts' expectations.
Alphabet Inc. said its third-quarter revenue reached $127.58 billion, slightly above the $128.22 billion forecast from analysts surveyed by LSEG, and marked a 25% year-over-year increase, the fastest since 2021. Net income declined to $26.17 billion, or $2.12 per share, compared with $34.98 billion, or $2.87 per share, a year earlier.
Free cash flow for the quarter dropped to $9.07 billion, missing the $2.70 billion consensus estimate. Capital expenditures totaled $51.36 billion, below the $55.09 billion analysts had projected. The company previously raised its full-year capex outlook to $195-$205 billion, with expectations of exceeding $200 billion and possibly $300 billion in 2027.
Operating income was $40.58 billion, short of the $43.19 billion forecast from FactSet. Cloud revenue more than doubled to $30.7 billion, surpassing the $28.7 billion estimate and indicating continued market-share gains against rivals Amazon Web Services and Microsoft Azure.
Google’s Gemini app reported reaching one billion users, described as the fastest-growing product in the company's history. Search revenue grew 12% to $63.35 billion, but fell below the $64.96 billion estimate.
"Our AI investments are beginning to deliver results, as shown by the rapid adoption of Gemini and strong cloud growth," a company spokesperson said.
Alphabet shares fell more than 7% after the earnings release.