Google stock falls in after-hours amid a Q3 miss in earnings and revenue

Yahoo Finance's Jared Blikre joins the Live show to break down Google's third-quarter earnings report.

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DAVE BRIGGS: Jared, you have the Alphabet numbers in, and that's what I'm saying. A bit of a surprise here, as those begin to come in. What are you seeing?

JARED BLIKRE: Yeah, Dave, a miss on both the top and bottom lines. Let's go through those numbers for the third quarter. Revenue coming in a bit light, 69.09 billion. The estimate was for 70.76 billion. Ex traffic acquisition costs-- this is really the line that matters-- 57.27 billion, and that's also light of the expectation of 58.18 billion. EPS also lower than expectations, $1.06 versus estimates of $1.25.

And then revenue, when you break it down by segment, you have advertising coming in 54.48 billion. That's less than the estimate of 56.98 billion. Other revenue, 6.9 basis. That was actually a little-- a small beat. The estimate was for 6.84 billion. The service is coming in at 61.38 billion. Estimate was for about 2 billion higher. Cloud revenue, 6.87 billion. That was a little bit above the estimate of 6.61 billion. And then other bets, 209 billion-- 209 million versus 204 million.

Now, operating margin a bit light at 25%. The estimate was for 27.9%. And then capital expenditures about a little bit less than expected, 7.28 billion versus estimates of 7.65 billion. And then also number of employees, that came in pretty heavy, 186,000, 779,000-- 779 versus estimates-- this is about 9,000 lower, 177,845.

Also have a quote from Sundar Pichai here, CEO. We're sharpening our focus on a clear set of product and business priorities. Product announcement that we have made in just the past month alone have shown that very clearly, including significant improvements to both search and cloud powered by AI and new ways to monetize YouTube Shorts. We are focused on both investing responsibly for the long-term and being responsive to the economic environment. One more number for you-- Alphabet, third quarter YouTube ads, revenue was $7.07 billion, light of the estimate, 7.46 billion. So just about lightness all around, guys.

DAVE BRIGGS: So is that your two leads, YouTube and cloud? Cloud the biggest surprise there to you, Jared?

JARED BLIKRE: Just going-- yeah, I think that was a big surprise in terms of this segment that it actually managed to beat. That's been very strong. We've seen from another performance. Of course, we have Amazon earnings on deck later this week. we'll have to see how AWS does. But yeah, that was nice to see. But the service is really a bit light there. Operating margin also a disappointment. So Google is kind of an-- Alphabet is kind of a black box here.

Reading into some of the numbers, when you look at employee headcount, the fact that it was missed by 9,000, maybe they're running a little bit heavy on personnel. Don't want to read too much into that, but we will be looking for some clarification for that in the interviews that we have to come on this, Dave.

DAVE BRIGGS: Yeah, you do because you remember that quote from Sundar Pichai-- what was it-- a month or so ago, when he said they need to be 20% more productive. And everyone wondered--

JARED BLIKRE: Well, here are the employees. Too many.

DAVE BRIGGS: Right, is that 20% less headcount this time next year. Good stuff.

SEANA SMITH: Yeah, and it's also interesting seeing the reaction that we're seeing play out in Meta. Meta stock off just around 2.7%, following the miss here from Alphabet. Amazon also down 1%. We'll be hearing from both those names over the next two trading days. YouTube ad revenue, that's what really sticks out to me here. A miss once again, coming in at 7.1 billion. The estimate out there was for 7.46 billion. So just a bit light.

Sundar Pichai, in this earnings release, saying that the company is working to realign resources to high growth, sharpening focus on a clear set of priorities. They did single out search revenue as a highlight in this report. Search revenue for the quarter totaling 39.5 billion. But that cloud revenue of 6.87 billion, YouTube ad revenue, 7.07 billion. We're seeing the stock up just around 5% after-hours.